[quote=sdrealtor]Nice work but so tough to simplify something impacted by so many factors.[/quote]
Actually, I don’t feel I’m trying to simplify. When I first set out to do this, I thought, maybe interest rates and inflation would account for about 50% of the rise in prices. I didn’t for one second think I would find that interest rates and inflation would account for pretty much all of the rise. When the charts first popped up, I was shocked how close they were. And then when I started to think about what I was seeing I realized that none of these other factors probably matters much at all. (At least not over the long term. Over the short term, we can see the actual prices (red case shiller) deviates from my expected prices during the mid-2000’s. So over the short term, prices can definitely be impacted by other factors!)
[quote] Rising rates would only lock more people with sub 3% in place and further limit supply. [/quote] Don’t misunderstand me here. I’m not making any prediction about what will happen. Not only would what you say potentially be true, but if interest rates do go up, there’s a good chance that they are going up because of higher inflation at the same time. Depending on the amount of inflation we could see very different paths.
[quote] On the demand side I would agree that inflation and rates were huge but don’t discount stocks, wealth transfers, stock based comp plans, work from home, higher awareness of SD worldwide, transforming from a tourist/military economy to tech/telcom/life science economy locally and of course crypto baby! They are all supercharging each other and I left out plenty Of others. In the current boom down payments have been huge on the whole which limits impact of wages and rates. There is no simple answer[/quote]
If we are talking short term (5 years?) maybe some of those factors will have a large impact. But looking back historically, it doesn’t look to me like any of those things have had a long term impact. I will certainly concede though that past performance is not indicative of future performance, so… who knows maybe in the future.
