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Westwood Capital, a US finance firm, have a slide set out trying to pretend all is well with the US property market. I can’t recommend their thesis of US housing shortages and rent hikes, but perma-bulls might enjoy being stroked.

Dross.

Except slide 12 which breaks US BLS inflation components into Housing and All Items Less Shelter. It shows actual deflation in everything but housing.

Put another way, in a deflationary era, the cost of housing is rising relative to everything else, notably Goods.

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US RE continues to be constipated, with low volumes traded as the entire population sits tight amid great uncertainty. Seven years have passed in this uncomfortable posture. I think the giant intervention by the US central bank to save their corrupt and bankrupt banks stopped the land price falls and arrested their revert to mean – at great cost to ordinary taxpayers.

Now it is reflating, albeit slowly and in a relative sense. Clearly, the task of wringing the speculative impulse out of US property is not yet complete and the market bottom still lies ahead.