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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: SouthFloridaGuy who wrote (28839)3/29/2005 10:24:39 AM
From: GraceZRead Replies (1) of 306849
 
Conention #1 is not happening for most people in the U.S excluding insurance benefits.

It is fairly predictable for individuals earnings to rise, as their experience accumulates, until age 45-50 where they peak and then level off. This is even more likely for the current crop of 30 year olds in professional fields, considering the huge number of baby boomers expected to leave the labor force in the next ten to fifteen years leaving the US labor force short on experience. We also have a surplus of workers low on the productivity scale whose incomes will stagnate unless we make significant investments in the capital equipment and education to make them more productive. Their incomes will come under pressure from the rest of the world. My guess is that if someone is 30 years old working in a low level service job, they don't have a mortgage.

I don't doubt that some 30 year olds, who were prime recipients of the tech bubble, who received incomes far in excess of what they produced, may never see that level of earnings again, but that is a fairly small percentage of the working population. Plus, if someone is 50 years old expecting their income to double in the next ten years, they will most likely also be disappointed.

Contention #2 already happened, unless you're proposing that mortgage rates will hit 3%?

I wouldn't rule it out. Interest rates have a higher probability of remaining in a trend than in reverting to the mean. The trend has been down for over 20 years.
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