Thursday, May 16, 2013 – 10:00 a.m.
Apparently only a few are learning any lessons from 2008.
A stock market that sees nothing wrong, and a real estate market, where the Southern California real estate median, not average, price has reportedly returned to pre-2008 levels, all at the same time can make one queasy.
Last week the Dow Jones and S&P 500 indexes rallied because jobless claims fell to a five-year low. Today the same weekly claims indicator skyrocketed back to 360,000. A number obviously higher than economists expected. After all, the expert estimates really are just best guess.
April housing starts also plummeted from a five-year high.
The market reaction today? Ho hum!
More alarming is information coming from the mouths of local Realtors.
Investment funds are coming in and bidding up residential and multi-family properties above their appraised values. The overbidding is sometimes has high as $20,000 t0 $30,000 over market. Several companies are out collectively spending billions scooping up properties. The result is low inventory for the everyday buyers.
Some smaller investors are getting burned with significant costs related to evictions and rehabilitating damage inflicted to the properties by the previous occupants.
It’s nice that the orchestrated attempt at asset re-inflation is providing some relief to government coffers. But it likely won’t last long-term.
Lackluster growth in household incomes, increasing (U-6) underemployment and continued high gas prices will likely prove to be a drag.
Even projections of corporate revenue growth are already coming down.
Only time will tell.