Interesting To Watch Economic Sentiment Come And Go

I read a lot online because I have this overarching need to understand how things work and so that I don't come off as uninformed when I write.  My fear of not knowing something fuels my highest value of continually learning.  

So in all of this reading, I came across an interesting information over the past week.  This article in The Orange County Register, "Beige Book: Fed Sees Western Real Estate As 'Robust'", did a great job showing the incredibly strong demand for real estate on the west coast:

Quoting directly, here’s what was said about Western real estate in 2016’s first Beige Book: 

Real estate market activity grew at a robust pace across most of the District. Demand for new residential units remains high, with contacts in many West Coast cities reporting ongoing reductions in vacancy rates. 

Residential construction activity grew substantially, with a somewhat stronger market for multifamily units than for single-family units. 

Housing prices rose further across the District, and contacts expressed concerns over affordability for low-income buyers. 

The Register, I think, did a brilliant job including Beige Book comments about where the market was five years ago:

And five years earlier: 

Demand in District residential and commercial real estate markets was largely unchanged at very low levels. The pace of home sales remained quite slow throughout the District. 

In addition, an abundance of foreclosed properties and short sales kept inventories of available homes elevated in most areas, which put downward pressure on prices and the pace of new home construction.

Five years ago, the real estate market was a mess.  Excess inventory ruled the day.  Everyone wanted to sell and nobody wanted to, or could, buy.  (Slight exaggeration).

Now, everyone wants to buy and nobody wants to sell.  Prices have come back close to Housing/Credit Bubble levels.  I hear people every week talking about how they want to get in now before prices get even higher, which makes me shake my head.  Have they seriously forgotten what happened in 2007-2011 where prices tanked and homes became really cheap?

Which leads me to oil prices.  Back in 2008, they peaked at $145.31 per barrel.  Today, West Texas Intermediate (WTI) is trading at $27.40!  WTF!

In 2008, there was supposedly a shortage of oil in the world.  Whether that was true or not or was just trader and producer manipulation, prices skyrocketed as the American and global economy was tanking, which didn't make any sense to me at the time.  (Still doesn't). 

But today, the world is apparently awash in oil and with Iran's sanctions lifted, more cheap oil is coming to a gas pump near you "while supplies last!"   

Prices and sentiment across all asset classes fluctuate.  What's true today was not true 5-7 years ago nor will it be true five years in the future.  Oil prices will probably rise.  Home prices will probably fall.  Change is inevitable.