The real economy is intensely interesting. We’ve spent a great deal of time researching the decades long fracture of modern American economics, and reconciling political fractures from a basis of the underlying economy. It helps to understand what’s going on.
Previously we presented a rather radical outline explaining a new dimension in economic theory, the “Third Dimension in American Economics“.
Essentially, our focus is reconciling what happens domestically when decades of “globalism economic policy” suddenly switch-back to “Americanism economic policy”.
It is not an easy task to map out what happens in the space between a “Wall Street economy” and a “Main Street economy”. As a result of the 2016 election we are in this space right now.
We further call this “The space between“.
To further understanding the space between the two policy-driven economies we have established some tripwires; specific points of reference which, if triggered, will either affirm or refute the basic principles within this new economic path. One of those specific tripwires is:
♦ Tripwire Number Three – Another weird dichotomy, Housing Values. This one is a little tricky because region to region there are multiple variances and possible outcomes.
However, in a general sense, even with expansive GDP and growing wage rate pressure, home values in the aggregate will drop. Rent prices will also drop. The reason is odd, yet simple. Moving forward, investment ownership will be less favored and there is a massive amount of investment capital currently holding real estate.
A weird confluence exists. Check your local real estate listings you will most likely see many more homes, condos and apartments for sale. Increased inventory = lower overall prices. Large, multi-unit building investment, lags approximately 18 months behind most current economic trends. (more)
Tripwire Number Three is indeed triggering – Home values are dropping, quickly.
With economic forecasts/projections providing greater potential for income growth in traditional main street investments; combined with an overinflated valuation of property – and a simultaneous under-occupancy by traditional home owners, institutional investors (Wall Street) are beginning to retreat from the housing sector.
Essentially, with real-estate investing pull-back, the home ownership market is beginning the process of self correcting. The indicators now show the historically low home-ownership rate has bottomed out, and the prices will now drop until the traditional home-owner can afford to purchase and reestablish a more traditional market:
It’s a weird and complex dynamic, but when you think about it on a larger ideological scale it begins to make sense.
The various elements of the U.S. economy which gained most benefit from Wall Street’s influence over DC legislative priorities are now positioned less favorably with a changed focus toward Main Street’s influence over legislative priorities.
The two economies “Wall Street” and “Main Street” were at their greatest distance from each other as a specific outcome of pro-Wall Street policy. That policy has been pushing them apart for over three decades. The disparity of income wealth distribution has followed an identical path because they are related and intertwined.
Effective November 8th, 2016, the movement apart stopped. The policies are currently in the process of re-evaluation; and with Trump economic cabinet members and policy interests clear, subsequent reversals are transparently predictable. Main Street becomes the benefactor.
Within the housing sector, all aggregate movement will naturally begin to shift toward the representative voice/benefactor of the Main Street policy being favored. Ergo, the sector flows economically back toward traditional home buyers.