Conservative Economics

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Subject: Real Estate

Real estate is a legal term (in some jurisdictions, such as the USA, United Kingdom, Canada, Australia and The Bahamas) that encompasses land along with improvements to the land, such as buildings,fences, wells and other site improvements that are fixed in location — immovable. Real estate law is the body of regulations and legal codes which pertain to such matters under a particular jurisdiction and include things such as commercial and residential real property transactions. Real estate is often considered synonymous with real property (sometimes called realty), in contrast with personal property (sometimes called chattel or personalty under chattel law or personal property law).
However, in some situations the term “real estate” refers to the land and fixtures together, as distinguished from “real property,” referring to ownership of land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof. Real property is typically considered to be Immovable property The terms real estate and real property are used primarily in common law, while civil law jurisdictions refer instead to immovable property. (Wikipedia Feb 2010)

Arguments for inflation

Will US home prices be higher in 2015?

Typical American home

This article is in response to a reader’s comment as to the future of US housing prices. Specifically, whether residential prices will rise 30% by August 2015. I argue that this is essentially a question as to whether the Obama administration will lead to continued deflation or a return of inflation.

I present a series of arguments for predicting inflation and consequently the revival of residential real estate prices by 2015. Basically it comes down to the declining political fortunes of Barack Obama intersecting with the excessive spending habits of the Pelosi-Reid Congress.

Real Estate 1995-2004

Construction, land costs, and pensions

American Homes: Land vs. Buildings

Over the decade 1995 – 2004, the market value of US residential real estate increased, on average, about 10% a year. The imputed value of land as a percentage of total residential property values, rose from 25% to 38%. The older the city, the greater the burden unionized public servants will be on local property values.

State and Local Government liabilities with pension funds (Q3 2005) totaled US$2.7 trillion, and this is probably understated.

Whereas citizens cannot escape federal taxes, they can run from state and local taxes by moving to lower-tax areas — ‘voting with their feet’, as it were.

Investment 1995 - 2004

Home equity beats stocks

Home Equity vs. Stock Holdings

In 1995, US households held similar amounts of assets in home equity and corporate stocks: US$ 4.3 trillion in stocks and US$ 4.7 trillion in home equity. Over the decade, the situation changed dramatically, so that by 2004, households held US$ 4.8 trillion more in home equity than in corporate stocks.

This difference came about because of the crash in the stock market in 2000-2001 and because of the steady increase in home values throughout the decade. Low interest rates and easier terms on home mortgages pushed prices of residential real estate upwards, while individuals favored indirect investment in stocks through mutual funds over direct holdings.

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Featured articles on inside pages

Stock buybacks

Accelerating to a buyback-option blowout

By Q1 2006, stock buybacks had multiplied to five times the level of 2000. Buybacks grew by 25% in 2005, with corporate profits after taxes increasing only 5.5%. At these rates, buybacks will exceed after-tax profits by 2009.
More ...

Securities Analysis

Intrinsic value

The target of classical security analysis is 'intrinsic value', a fuzzy concept defined as the value justified by the facts. Now, there may be too many 'facts' while prices exceed 'intrinsic value'. More ...

US Politics

Why Congress won't kill ACORN

Closely connected with President Obama, the ACORN group of "community organizers" has drawn censure from the Democrat-controlled Congress as a result of investigative reporting by James O'Keefe and Hannah Giles. More ...

US equities

The productivity vs. population debate

The 'Baby Boomer Bomb' refers to the expected effect of the retirement of the Baby Boomer generation on capital markets, particularly equities. Two proposed 'solutions' to the problem are examined: Boomers being 'saved' by productivity and technology; and, alternatively, by selling their financial assets to the next generation..
More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

Working off the US trade deficit

Foreigners hold $16.8 trillion in US financial assets as a result of selling more goods to Americans than they buy from them. Since the 'deficit' is in dollars, the US has no problem in 'paying it off'. More ...

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2010-08-27 16:03