Low interest rates in advanced countries have pushed money into real estate
According to the McKinsey study mentioned in the article[a]:<p>* Two-thirds of global paper wealth is tied up in real estate valuations (residential and commercial).<p>* Paper wealth is now nearly 50% higher (!) than its long-run average relative to income, globally.<p>* Paper wealth and economic growth are no longer moving in sync, as they had in the past for a long time at the global level, albeit with some country-specific deviations.<p><i>Asset prices around the world, including property prices, are now in unprecedented territory</i>; there is no doubt about that.<p>There are many possible explanations for this deviation from long-term norms, but they come broadly from two camps. In one camp are those who are not sure why they should even worry about this, because they believe the global economy is about to shift to much faster economic growth, driven by new technologies like AI, quantum computing, cheap sustainable energy, and space exploration. In the other camp are those who are quite concerned about the financial, economic, and political consequences if paper wealth reverts to historical norms in relation to global income.<p>Some of the smartest people I know are either in one camp or the other, with little overlap between camps. My perception is that there&#x27;s no shared agreement as to what any of this means, or whether anything should be done about it.<p>--<p>[a] <a href="https:&#x2F;&#x2F;www.mckinsey.com&#x2F;industries&#x2F;financial-services&#x2F;our-insights&#x2F;the-rise-and-rise-of-the-global-balance-sheet-how-productively-are-we-using-our-wealth" rel="nofollow">https:&#x2F;&#x2F;www.mckinsey.com&#x2F;industries&#x2F;financial-services&#x2F;our-i...</a>