Posted on 10/10/2006 6:44:10 AM PDT by Righty_McRight
Our home equity has increased a great deal since 1997. I think a lot of the increase in the price of housing has been driven by the tax law changes, passed in 1997 that exempted taxes on capital gains up to $250K for singles and $500K for couples.
I think it is mostly related to the lower interest rates...See what happens if interest rates hit 9%.
During the last great run in real estate values (January 1976- January 1979) the fed funds rate rose from 4.87 to 13.82 percent. While that was happening home demand and prices continued to skyrocket. Low interest rates play a role but demand is much more important.
Look at the real estate bear markets of 1974-75, 1980 and 1990-92. In each of these the prime rate was falling during the years mentioned. Internationally, real estate fell in Japan throughout the 1990s despite interest rates falling to near zero.
I know someone who took a couple courses in ArcGIS from the Geography Dept at a major university. Not as intuitive as AutoCAD from what I can tell. However, I would imagine knowing ArcGIS would be a highly valuable specialized skill. My very first job was mechanical drafting.
LOL! Dassault is to Airbus as Airbus is to Boeing?
ArcGIS has better query tools for mining data. It's just that AutoCAD could run on MS-DOS based computers rather than Unix work stations, so we used AutoCAD. Computing hardware is much cheaper now, so functionality is more important. AutoCAD is great as a drawing tool for creating map entities, but ArcGIS is better for linking those entities to databases. AutoCAD Map has the ability to have multiple users check out portions of the same drawing and write the changes back to that drawing, but ArcGIS being a true GIS does those operations better.
Ok, what drives demand?
To Euro-peons, bad stuff is always someone else's fault, and fixing it is always someone else's responsibility.
So, Airbus' troubles are not an uncompetitive product mix or serious market missteps... it's that bogeyman of all socialists, Bush.
But actually, they have a point. The "weak" dollar was actually one of the more brilliant economic moves Bush has made. By bringing the dollar back closer to historic norms with respect to world currencies (versus its artificially inflated "strength" during the preceding decade), our export economy got a much-needed jump-start, after two decades of withering from Clintonian exchange-rate mismanagement and the assaults of NAFTA, GATT and so on. Europe was caught flat-footed. Unfortunately the Chinese yuan still mostly pegged to the U.S. dollar, so its export economy is benefiting too.
But all in all, Airbus' trouble is a product line that misses the market. One example: the A350 is a lovely bird, one of the prettiest in the sky and a solid machine with a good safety record, but it's a quad-jet competing against the sublime Boeing 777, a much-more-efficient twinjet, and the new 787 dreamliner, also a twinjet and super-ultra-efficient. Meanwhile Airbus put all its eggs in the A380's basket... the Edsel of the air.
From 1997 to 2004 we cashed in more than $3.5 trillion in capital gains. This is more than the previous 20 years combined. In terms of numbers, our population is also growing rapidly. Also and to your point, lower interest rates has allowed more renters to become owners and new technologies have reduced the cost of obtaining a mortgage and standardized a set of lending guidelines that has allowed for a more precise measurement of a borrower’s credit risk.
I also think the fact that many new kinds of mortgages have become available has helped demand. The secondary mortgage market has grown and matured so that many kinds of mortgages can now be packaged and sold as mortgage-backed securities. The mortgage market has also become more specialized, as firms concentrate on different pieces of the market, including origination, servicing and securitization.
All these things have played a role in increasing demand. The rapid rise in home values has been limited to specific regions and is in no way being experienced by the entire country. Many areas continue to see average increases that are unremarkable. This shows that demand for housing is based on geographic desirability which is also an important consideration.
You are obviously very well informed. Thanks for the info.!
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