The Great Disconnect of 2014: Stock and Real Estate Prices Soar Above Measures of Economic Growth

HomesSF.com, a website for high-end residential properties, has released a report that compares U.S. data of real estate and stock values with principal measures of economic growth. The data reveals that the growth in stock and real estate values has far outpaced increases in measures of economic growth.

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Graph of Cumulative Quarterly Growth

Graph of Cumulative Quarterly Growth

The data indicates a fundamental disconnect between the growth of these asset values and the growth of the underlying economy

San Francisco, California (PRWEB) May 21, 2014

HomesSF.com, a website for high-end residential properties, has released a report that compares U.S. data of real estate and stock values with principal measures of economic growth. The data reveals that the growth in stock and real estate values has far outpaced increases in measures of economic growth.

HomesSF.com is a site primarily focused on the luxury residential real estate market of San Francisco but also reports on topics that are of interest to real estate owners and investors. With the dramatic upsurge in stock and real estate values in the last several years, HomesSF.com is providing one perspective by comparing them to the growth in principal U.S. economic indicators.

The data compares the cumulative growth from quarter 1, 2009 to quarter 1, 2014. In the comparison are the S&P 500 Stock Index, The S&P Case Shiller Index for home prices in San Francisco, U.S. Gross Domestic Product, Employment (number of employed persons), and Real Disposable Income.

S&P 500 Index and S&P Case Shiller Index data was sourced at the S&P Dow Jones Indices website. U.S. GDP, Employment and Disposable Income data were sourced at FRED the “Federal Reserve Economic Data” at the St. Louis Federal Reserve Bank website.
Quarter 1 2009 values were used as a base for each category. The U.S. Employment data represents the increase in the actual number of people employed not the change in the unemployment rate. Quarterly data alignment may be skewed by as much as one-quarter due to data reporting differences of the various indices.

Cumulative growth in the 5 years between Quarter 1, 2009 and Quarter 1, 2014 in each of the five categories was:

Growth in the S&P 500 Stock Index: 134.7 %
Growth in the S&P Case Shiller San Francisco Home Price Index: 45.9 %
Growth in the U.S Gross Domestic Product: 11.0 %
Growth in the U.S Number of Employed Persons: 3.8 %
Growth in U.S. Disposable Income: 7.8 %

Kirk Economos part of the team at HomesSF.com said: “Perhaps a comparison of the asset value of stocks and real estate to these economic indicators cannot be unfailingly correlated; however the data indicates a fundamental disconnect between the growth of these asset values and the growth of the underlying economy.”

The accompanying graph shows the values charted on a quarterly basis- Click here for larger image.

Additional data including the U.S. “Composite of Leading Economic Indicators” and the “Kauffman Index of Entrepreneurial Activity”, a measure of new business starts, further reinforces this fundamental disconnect.

Kirk Economos said: ”There is hope by many, including the Federal Reserve Board, that stock and real estate values, the “tail”, will eventually “wag the dog”, the underlying economy. In the meantime investors and owners of stocks and luxury real estate are encouraged to consider a broad perspective in their investment evaluations.”

Peggy Economos and Kirk Economos are San Francisco luxury residential property specialists with Pacific Union International, Christies International Residential Real Estate at their Presidio Offices in San Francisco. They are a wife and husband team that brings together complementary skill sets and decades of experience.

HomesSF.com offers a wider perspective than just the local San Francisco luxury market. The site offers information on the San Francisco market as well as news, insight and information on national and global high-end properties and markets.

For buyer and seller representation, real estate information in San Francisco or for a qualified luxury property agent referral in your specific area contact: Peggy and Kirk Economos, http://HomeSF.com , (415) 271-6390.


Contact

  • Peggy Economos agent for Pacific Union International
    HomesSF.com
    +1 (415) 271-6390
    Email
  • Kirk Economos agent for Pacific Union International
    HomesSF.com
    (415) 271-6390
    Email

Attachments

Kirk Economos, Broker, San Francisco Luxury Residential Properties Kirk Economos, Luxury Properties

Kirk Economos, Broker, San Francisco Luxury Residential Properties