There were a couple of real estate booms in the 1970’s. The second one, I believe, was an inflation boom.

People saw their incomes being eroded by inflation. Real estate prices, however, appreciated along with inflation. Real estate was seen as an investment that was “inflation-proof.” Big money flowed into real estate and prices boomed.

Could we see a similar inflation-proof real estate boom play out in coming years?

Right now the economy is so weak inflation isn’t a danger. When the economy turns around, however, all that federal fiscal stimulus may trigger inflation like we haven’t seen since the 1970’s and that in turn could lead to a flight to inflation-proof investments like real estate.

These deficits give me the same feeling as when the median home price was increasing by $10,000 a month… that it is crazy.

Here is a political piece that does, however, do a good job of graphically showing the size of these deficits in a historical perspective.