Patrick Kavanagh Scam - Has The Federal Reserve Changed Real Estate For Good?

Summary

  • Home prices have seemingly detached from all historic indicators and correlations.
  • Income growth is falling as home prices are rising.
  • Supply of homes is historically low and the volume of home sales is plunging to 2006-2007 levels.
  • In a world of global stimulus, does it matter? Will home prices eventually return to reality or has real estate been permanently inflated?
This week has been filled with economic data pertaining to Real Estate. On Tuesday, FHFA House Price Index, Case-Shiller Home Price Index and New Home sales were released. My analysis showed a mixed bag and not much deviation from the trend I've tirelessly been pointing out of record low supply driving prices to artificially high levels. Prices are rising in an unsustainable fashion.

I will run through all the data as I normally do but focus on the question as to whether the Federal Reserve and Central Banks alike have changed the dynamic of asset prices forever or if prices will correct and return to their historical trend.

Data Crunch:

FHFA Home Price index rose to 6.43% Y/Y and the Case-Shiller Home Price Index showed a similar reading rising to 5.9% from 5.7% a month prior.

New Home Sales smashed expectations for 588k and came in at 621k; last month was revised 5k lower.


                                  Home price growth has flat lined for two years on a national level.


The FHFA Home Price Index breaks down into several regions and while the chart is noisy, all regions are showing similar growth patterns. Not much is to gain from this chart but it is worth looking at the growth trends of all regions to spot outliers and divergences.

For more Information:- Eric Basmajian

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