Posts filed under “Real Estate”

Consumer Spending and Housing Correlation

Historically, consumer credit has roughly tracked overall changes in house prices. In other words, the consumers’ ability to borrow — and then go out and spend — has been highly correlated to real estate changes (and hence, the importance of interest rates).

In the attached chart, courtesy of Michael Panzner at Rabo Securities, the year-on-year changes in the U.S. Office of Federal Housing Enterprise Oversight’s quarterly house price index is overlayed on a graph of consumer credit outstanding as a percentage of nominal GDP.

In a healthy environment, you see real (after inflation) wages rise, and consumer spending going higher along with that.

In a stimulus-driven environment like we’ve enjoyed for the past three years, instead of real wage growth, there’s been a lot of consumer borrowing propelling their spending.  I expect as the borrowing slows down, so too will the consumer spending.

I don’t see how to put a positive spin on that.

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click for larger graph

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Source: Mike Panzner, Rabo Securities

Category: Economy, Real Estate, Retail

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Category: Real Estate

McCulley on MEW

Category: Economy, Real Estate

New Home Sales versus Housing Starts and Permits

Category: Real Estate

Howz Real Estate Doin’?

Category: Economy, Real Estate

Chart of the Week: GDP w/o Mortgage Equity Withdrawal

Category: Economy, Real Estate

WSJ Real Estate Triple Play

Category: Financial Press, Real Estate

That Cheery Notion of Upbeat Economic News

Category: Commodities, Economy, Investing, Markets, Real Estate

Headlines versus Underlying Data

Category: Commodities, Data Analysis, Earnings, Economy, Inflation, Real Estate, Retail

Category: Real Estate