TD,
I am glad that you've discovered that home prices behave similarly to those of bonds, i.e. when interest rates go down, home and bond values go up. Unfortunately, Newton's findings also apply to the social sciences.
After nearly a decade of ultra-low interest rates, might we expect a reversal in the not too distant future? Typically, when inflation heats up, the response is for the Federal Reserve to raise interest rates. But in this spend, borrow, and tax political frenzy with a compliant "independent" Fed already scratching at the bottom of the toolbox, what's going to give? Price controls have been disastrous every time. Repudiate interest payments and debt obligations, ultimately?
Please do explain to me how banks are creating money- maybe the half I don't get? It was my understanding that the Fed was paying them a couple of points to hold large reserves (which with near zero interest rates paid on demand deposits, along with all the nickel-and-dime fees they now charge normal retail customers, it probably gives them the spread typically needed to cover variable costs).
I was under the impression that the primary way money is being created, electronically, is the Fed's expansion of its balance sheet by purchasing the bulk of the federal debt and other assets which carry high risk. I've asked for someone to take me through the T-accounts (debits and credits) of how this works, but so far I just received general narratives (even an email to the research staff at the Dallas Fed a while back went unanswered).
Another likely contributor to the subject of this thread is related to the Fed interest squeeze, i.e. in its approach to accommodate spending and debt thereby punishing savers, mostly seniors, it has pushed people into much higher risk equity investments. I know that there is not much sympathy for short-sellers among the general population, but there are many really crappy companies whose escalating stock prices can't be explained by past, current, and expected future performance. The shorts are being covered, feeding further fuel into the stock market, and portfolio values continue to grow.
There is a connection between high stock prices and the feeling of economic well-being even affecting those who have relatively little invested in the market. Those buying in golf communities are not the average Joe or the barista at your favorite caffeine joint. They are those who earn enough to save (some 60% of Americans spend more or the same as they make; around 30% of Americans are estimated to have 401k accounts). I suspect that the beneficiaries of the long-running stock market are feeling pretty good about their situation, especially if they lack much of an understanding of economics and possess a short memory.
Doubtful that I will be in the market for a golf course residence in the future, but my bet is that there will be some fantastic buying opportunities in the next five to 10 years. I've seen this cycle twice before, albeit when things hadn't gone out of balance as much as they are currently. The exuberance of the real estate and stock markets will not continue for long, at least not on a real basis. But who knows, maybe we will all be deci$-millionaires and the yuan or a form of bitcoin becomes the reserve currency. Brave new world!