Real estate forecasts and US Inflation Index. Local real estate forecasts and the inflation. index in the US are related to commodities and housing. Food and energy prices are not included in the inflation index. But these are two areas in the economy with dramatic and dangerous price increases that have an immediate impact on consumer spending. If wage growth has been weak or nonexistent, even though inflation is taken into account, people in theory should have the same purchasing power as five years ago, but they don’t.
Real Estate Forecasts and US Inflation Index in Truth
In truth, the average standard of living and net value has actually decreased in the past five years. With wage growth only matching inflation, dramatic increases in fuel and food costs have actually diminished overall purchasing power. For us, Growth Maps, and for many real estate professionals, having a local housing market forecast is critical to the investment in real estate.
So why is the economy still growing and the stock market doing so well? In the short term, what kept and keeps things afloat was more artificial money, better defined as debt primarily credit cards and second mortgages and increased pension funds with the increased stock market. Credit card companies got smart though, and began demanding larger minimum payments to compensate for the increasing foreclosure rate. But today, they are easing credit restrictions, compared to prior years…
The more income devoted to interest payments for things they had already purchased, the less their purchasing power for other things.
Real Estate Forecasts and Leading Economic Indicators and ripple effects.
The point of this section is not to bore you with tales of a series of ripple effects caused or exacerbated by the housing market collapse and the very slow recovery. It is meant to illustrate one point and one point only:
Everything is connected.
This makes our current concept of the market look very simple, at least from a real estate perspective. The real estate market can be compared to a human being: It is a living organism that constantly responds to and creates market conditions. And like the human being, you can use real-time vital signs to assess its overall health. In theory, the market should have never over-built, because artificial demand would have been identified and corrected almost immediately, and local housing market forecast would have prevented the problem. But because of the way data has traditionally been collected and communicated, it took far too long for the market to realize there was more real estate than we needed.
If real estate professional had access to monthly updated social-economic growth data, real estate forecasts, and leading economic indicators, things would have been different. But they did not have access. Only with access, and any future market collapses ever be prevented or foreseen.
Would have a just a Florida Housing Market Forecast or Arizona Housing Market Forecast prevented the problem, I doubt it, remember all real estate is local, and there is little correlation from the macro to the micro. There is little correlation to forecasts or ANY demographic or economic data to the County, State or City Block level. Gee, do you think your income is the same as the median of all of your state? Of course not.
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