Housing

Bubble 2.0?

DYI:  No doubt for this chief cook and bottle washer of this blog my sentiment indicator for residential housing at max-optimism!  Prices are now so high those who purchase today will not have – IMO – an effective inflation hedge as years gone past. 

This is similar to gold way back when as gold topped out at $850 per ounce on January 21, 1980, which was a record high for the precious metal at the time.  From then on gold retreated despite inflation still in the system though at a far lesser rate when it bottomed out in the year 2000 at $274.50 per troy ounce.

I’m not going to go as far as the drop in gold from 1980 to the year 2000 is what is store for residential real estate; what I’m stating that over the next 10 and most likely 20 years interest rates will roller coaster to higher highs and higher lows thus subduing any price increases for existing or new homes.  Very possible – for those purchasing at todays prices – 20 years from now will likely underperform the rate of inflation.  In real terms – after inflation – the sale will be at a net loss in purchasing power.