GDP figures for the fourth quarter of 2011 were announced this morning and fell just slightly shy of estimates, although they were up 1.1% over the GDP of the third quarter. Consumer spending rose 2%: The great news was that housing investment rose significantly more than the 1% estimates by over 10%.
In Davos this week, the consensus is that we are entering TIGHTROPE TIMES where many different elements of the economy will have to be balanced and addressed simultaneously to work our way out of the global economic mess: this will involve a combination of writing down debts, defaults, printing money, policy changes, austerity measures, spending measures…..in short we are looking to at least 10 years to clean things up. The good news is that there is a global awareness of the big problems we are dealing with and that is good for markets….including real estate markets.
The overall consensus amongst hedge funds and investors is even greater diversification, with a lesser focus on equities. This is where real estate comes in. Gold and real estate are strong hedges against inflation and with consistent talk about printing money, we can be certain inflation is here to stay for a while, even though it may be somewhat more contained than the Ron Paul’s of the world say.
In the New York luxury real estate market, we are definitely seeing a spurt in investment buyers, and unlike the roaring 2000′s, now the investor is more interested in the long term as opposed to the short term fliper. That is always good for markets. I see the growth of Chinese (and other BRIC)buyers in New York as it appears more and more likely that housing bubbles could be emerging in those over-heated economies.