[quote=AN]
I wouldn’t 100% count on interest rates either. It depends on why interest rates went up. If the reason is like the 70s, good luck trying to catch the nominal price.[/quote]
Why did the interest rates go up in the 1970’s. I’d argue that the primary reason was baby boomers coming of age and demanding loans for houses while there was limited supply. In essence the supply demand curve for creditors and debtors was skewed heavily towards the debtors. Over time that curve has switched as baby boomers would rather be creditors rather than debtors as they approach retirement. I really think everything is going to boil down to the demographics in the end barring some miracle technology breakthrough.
In a decade or so when the boomers go from asset collectors to asset sellers asset prices will decline. Maybe not nominally but in real terms they will. Maybe the boomers will reverse mortgage homes and stay there but it’s hard to see a scenario where asset prices keep rising faster than the economy grows when a large portion of the population is going to be looking to cash in those assets either via rent collection or outright sale. Maybe I’m just looking at this too analytically or logically.
