Gold=bull run, is real estate at the bottom?
KUCH
Posts: 1,186
Some believe gold is still on a run, and could reach a high valuation by 2015. What say you for real estate? Are we at the bottom of this market?
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Liberty: Parent of Science & Industry
Gold is far from its top, silver even farther.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
the bottom as it's going to get.
But, gold and silver should go
higher !!!
There are hundreds of thousands if not millions of foreclosures to wade through. It will take time. We're only about 4-5 yrs into the
current RE correction. Even the 1988-1996 correction took a lot longer than that and conditions then were hardly as severe. And if one
considers that we might be correcting a 40-50 yr RE boom that began in the 1960's, it's going to take considerable time to unwind all the
bad debt. The worst of it should occur from 2013-2014 but not the end of it.
By definition, wouldn't a recovering real estate market mean that most real estate is gaining value, rather than continuing to sink? I don't think a recovery of ANY asset can be engineered simply by using monetary expansion or debt expansion. Smoke & mirrors.
The only way it happens is through productive jobs and industrious people. The only way. Not through government or banking.
Got gold?
I knew it would happen.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
However, there are some interesting commercial deals out there right now and if a person feels confident that they can cash flow the property...almost any time is the right time.
Premium projects for all cash to deep pocket groups are very complex transactions, sometimes very difficult to put under contract but have buyers waiting in line. 5-6% COC (for all cash) seems to make things happen right now. Some yields being offered are 4-5%.
Big properties are like big coins. Sometimes easy to sell, sometimes impossible.
Little properties are like little coins, the economy has to be moving.
Exactly right. And with the economy stagnating with real estate no longer acting as the "piggy bank", the spending is over unless the government gives money away in baskets.
I knew it would happen.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Knowledge is the enemy of fear
<< <i>The old adage, "Real estate is local", could never be truer today. There are some areas of the country that are ridiculously cheap. There is even a large metropolitan area in the Midwest that has tremendous infrastructure and large workforce that is selling for pennies on the dollar. What an opportunity. >>
Detroit?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Real estate is going to zero and gold is going to infinity. Everyone should sell their houses now and move into a shelter made of stacked metal bars. >>
Hilarious. I nominate this for post of the day.
Seriously, the best time to buy is when everyone hates an asset class. That's true of real estate now. I bought a condo two years ago here in a great part of Chicago, literally overlooking Lake Michigan, that was down 30% from it had sold for in 2007/2008 (and keep in mind Chicago never had the same runup as other cities). It's easy to rent out and cashflows every month. Also bought a vacant city lot (standard 25x125 size) last year in an up-and-coming area which was down almost 80% from its peak price of 2007/2008. It's crazy cheap. The only people who buy those lots are developers, and they can't get loans... so the prices have crashed. Once prices come back for the three-flats or large SFHs you can build on these lots, the prices will spring back.
They popped because they were inflated.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
demand will remain low
the key to the housing market is not in prices or interest rates. it is in jobs.
As all taxes and coming inflation (bought gas lately?) increase, disposable income will decrease. The trend will be to rent, even among those that can afford to buy.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Distressed and marginal properties, especially for sellers in a hurry, run down the averages but they don't affect properties with great locations that owners can either occupy or rent for + cash flow. There's a doughnut around city centers that tends to be best, way downtown can be too crowded and run down, too far out and prices are cheaper but the commute to work tends to be too far. Places like Vegas totally overbuilt by extrapolating trends, but there's no effin end to that desert, which becomes apparent when you fly in or out, of course they boomed most in the bubble (by units, not necessarily by value) and are down most when the bubble pops, whereas by comparison, in the SF bay area, it's all built up in the penninsulas and coasts so if someone wants a certain location, they bid and nice houses sell quickly with multiple offers. Also the kind of jobs has a lot to do with it, in Vegas the job growth tends to be tied to tourism, whereas in the south bay it's technology companies, different demographic. Recently a top 10 most miserable US cities list came out, I agree those markets will be weak for a loong time
Liberty: Parent of Science & Industry
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"As for Pieter Fransz's house, after taking three and a half centuries to double its real value, it has tripled in value in the last 22 years."
From Dutch history, a real estate lesson
Real estate purchased well--and even more importantly run well--can make you money. Lots of money. Like quit your real job and play around on the internet all day money.
How do I know?
--Severian the Lame
<< <i>IMO the bottom will be the new top. >>
Nothing, IMHO, could be further from the reality that I see. Speaking as a lad who sold commercial property as my first real job out of college in the mid 70's and as a guy who buys and sells commercial property(thankfully not a lot) and operates a manufacturing business in L.A.
There is a lot of stuff going on that people don't see unless one is 'in the game'.
In residential RE, investors are active with SFR. Middle to upper middle class SFR owner occ are active in good areas. Facebook will 'create' about what ...1000 millionaires? THINK about what that will do to the SARATOGA/LOS GATOS/LOS ALTOS RE market. Hold on to your hats in those towns. All cash buyers is what I see. And the sellers will use the money in many ways...some to buy other property. The ripple effect will generate many thousands of sales.
EVERY recession, people say the same thing, this recession is no different.
in the past that old time homeowners couldn't even dream of what housing went through from the 1960's to 2008 due to underlying fiat printing and debt/credit creation. Maybe
a better way to see where housing might be headed is to look at the 1890's and 1930's-1940's. 50 yrs of excess has to be shook out, not just what happened from 1996-2008.
Some areas of the country need a lot less shaking, if any.
<< <i>We're not currently going through an "EVERY" recession. This is a 60/120 yr type economic cycling bottoming all in one fell swoop. Those previous RE cycle lows are so far
in the past that old time homeowners couldn't even dream of what housing went through from the 1960's to 2008 due to underlying fiat printing and debt/credit creation. Maybe
a better way to see where housing might be headed is to look at the 1890's and 1930's-1940's. 50 yrs of excess has to be shook out, not just what happened from 1996-2008.
Some areas of the country need a lot less shaking, if any. >>
RR,
I get what your saying here, but at the same time I've been following the greater Phoenix market and there is a lot of investor activity as well as first time home buyer
activity, the inentory has shrunk to 1/3 of what it was at the peak. I know thats a large part due to the forclosure moratoriums that have been enacted over the past 10 months or so.
Are you looking at the fact that there still are a huge amount of forclosures in the process, so that overhang has yet to hit? And now that the banks have received their get out of the hot seat free card, will they be pressing the forclosures once again therefor starting a new down wave in price?
Or do you suppose they will try to do it incrementaly so as not to put to much downward pressure on values?
If they start processing the forclosures in great numbers are you also supposing that will overcome the current round of investors ability to absorb that new inventory with no adverse affects to values?
I have been a worker bee in every recession since 1975. EVERYTIME, at the tail end of the downturn........something happens to make the Los Altos/ Saratoga/Cupertino/ Los Gatos market E.X.P.L.O.D.E. with prices....and the Facebook IPO will do it this time. And that Facebook money will buyout other small companies in the commercial Facebook ecosystem. That will also have an effect on the residential market in the southbay. There are so many companies looking for blocks of space in the southbay...it would make your head spin. This Facebook deal will have a greater effect on the southbay than when John Sobrato announced the new (old) Apple campus. And the new Apple campus which amounts to all the old H-P property... and then some..... will put a heck of a lot of people back to work. Commercial developers in the southbay are licking their chops. And not to mention Google which is the 600 gorilla in Mtn. View.
There is so much more wealth in this country now than at any time in the past. There is so much money sitting on the sidelines....it is UNBELIEVABLE.
And...a lot of the world would love to be able to buy the U.S. cheap. They are now getting the chance. And with the continued devaluation of the dollar...this will continue. The FED actually should ratchet up a .25 right now. RIGHT NOW. That would actually bring people to the table(and make them do SOMETHING but buy PM's) and stop the funny business of putting all your dough in non performing assets. If the FED gives the slightest hint of raising rates....you got 6 months to thin the PM stack. JMHO
I'm just an average joe but I can do so much more in this recession than I could do in the 90-94 downturn. The 90-94 recession ate me alive but I prepared properly for this blip. So did my friends that were taught a very valuable lesson in 90-94. We are a little wiser and a lot more comfortable.
California is a layered market. The central valley will come back very slowly. The Bay Area is once again alive. Orange county is alive and not gasping for air. I haven't been this busy in my business since maybe 2006. I forgot what it is like to get home , have a cold one and pass out at 8pm. I don't like it but it beats the alternative.
The recession isn't over and for a lot of people ....still a long way to go---unfortunately----....... but there is a lot of business out there if you are properly positioned.
The facts don't match the rhetoric.
The recession has been over for a year. The definition is :"The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)"
From here:
Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- increased at an annual rate of 2.8 percent in the fourth quarter of 2011
(that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the
Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8 percent.
GM just posted it best quarter in history! They gave a $7000 bonus to their blue-collar employees.
Obama just passed the Payroll Tax Cut extension.
Unless you are living is some bubble or alternate universe or have some kind of weird wishful thinking, you can't argue that the economy isn't recovering, jobs aren't being created and taxes are rising.
then why the need for extended unemployment benefits, zero interest rate policy and continued increases of the federal debt ceiling. Taxes are now being hidden outside of your annual IRS 1040. Obamacare alone creates many new sources of income for the US Treasury that don't show up on the 1040. The payroll tax extension will be paid for by a new "mortgage" tax (effective 2012) that will add an avg. of $18 a month to all new mortgages and refinancing. Many new sources of government revenue will by design not take affect until after the next presidential election. The fact that they are being more creative in the way they take your money does not hide the fact that they are taking more of your money. When you figure in excise tax on gasoline, state sales taxes on money you spend and communication taxes on your cell phone, internet and cable TV you begin to realize you're "income tax" is only a part of your tax debt.
GM - isn't that the automotive manufacturer supported with taxpayer dollars and managed by politicians? Another fine example of too big too fail.
Government released numbers and statistics are no longer reliable facts.
Unemployment increases in Feb.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>The economy is getting worse, employment is getting worse and taxes are increasing.
The facts don't match the rhetoric.
The recession has been over for a year. The definition is :"The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)"
>>
I believe Its a decline in GDP for 2 consecutive quarters. Not negative in the sense that it hit zero growth and went negative ie. - 1.8% growth.
It usually goes something like +3.8% to +3.4% to+ 2.8% and there you have your modern classic recession definition.
It's because too many people are bouncing around and having fun in the safety nets. that and a couple of wars and disasters to clean up
Liberty: Parent of Science & Industry
It is always hard to buy at the bottom - are you a fool, catching a still-falling knife or are you a genius. Only time will tell. I think the real estate market looks much more attractive than the near-term record high stock market.
Government released numbers and statistics are no longer facts.
When you don't allow yourself any facts to stand on, you will fall for anything.
<< <i> I think the real estate market looks much more attractive than the near-term record high stock market. >>
They are both currently a suckers bet.
I am a foolish genius.
Disclaimer: I turned off CNBC a long time ago.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I may be nuts for a lot of reasons but I can still guess better than the bull goose looney.
There is a lot of business out there right now. More than what I can remember in the last few years. And everybody is lean and mean in their business which may mean why unemployment is still up there.
I have 5 acres of land in a downtown so. cal. city. Every one of my neighbors is buying property. Gerry, next door is on an acre and he just BOUGHT 2 new locations. One in Mo Valley and one in Lake Forest. He tried to buy any thing close but no sellers. You realize....we all own F & C. We aren't about to be foreclosed. I just drove my residential neighborhood. Not a for sale sign.
Chris, across the street from my business(2 acres and bldg.), just leased a 5k building to expand in Riverside. We are not the exception to the rule. We are mean old men. We've all been handed our hats at one time or another. I bought farmland last year because I have no intention of expanding as I have way too much unused capacity.
I'm starting to think that the biggest posters on this forum have never had a private sector job in the last 10-20 years. Most of youz are coming from out in left field ---
sorry if I ticked you off. I obviously am strongly opinionated...I just calls em like I see'm.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Corvette Highlights from the 7 January collector car auctions:..."terry m."
1953 White Convertible - Sold $467,500.00
1953 White Convertible - Sold $455,500.00
1954 Blue Convertible - Sold $176,000.00
1955 White Convertible - Sold $176,000.00
1955 Blue Convertible - Sold $165,000.00
1959 Big Brake Fuelie - Sold $174,900.00
1960 Big Brake Fuelie - Sold $185,500.00
1961 Gulf Oil Race Car - no sale $901,000.00
1961 Big Brake Fuelie -no sale $217,300.00
1962 Resto-Mod - Sold $401,500.00
1962 Resto-Mod - Sold $357,000.00
1963 Coupe Resto-Mod Red - Sold $270,300.00
1963 Convertible 300 hp Air Automatic - Sold $148,400.00
1965 Blue F.I. Convertible - Sold $118,800.00
1966 Resto-Mod - Sold $282,700.00
1966 White 425 hp Convertible - Sold $143,000.00
1966 Convertible 425 hp - Sold $139,920.00
1967 Blue 435 hp Convertible - Sold $249,100.00
1967 Maroon 435 Convertible - Sold $205,000.00
1967 Black (color change) 300 hp - Sold $113,300.00
1968 Silver L88 Convertible - Sold $687,500.00
1969 Orange L88 T-Top - Sold $451,000.00
1969 White L88 Convertible - no sale $424,000.00
1969 Yellow L88 Convertible - Sold $646,600.00
1969 Blue L88 T-Top - Sold $286,200.00
1972 Green LT1/ZR1 T-Top - Sold $137,800.00
2010 ZR1 Serial #1 - Sold $203,500.00
These are huge numbers that show the popularity of Corvette collecting is again on the rise...."terry m."
This ONLY happens when people with ability to spend, decide to spend. ..."me"
<< <i>Derryb, what if that real estate investment returned 6-7% per year? Also, if/when the real estate market improves then one could sell at a nice profit? >>
You have to consider what it costs you a year to get that return (mort. interest, taxes, insurance, maintenance, temporary loss of tenant, etc.). Could that money be giving a better return elsewhere with less liability?
The time will come when real estate will be a great investment. I just believe, for most people, now is not the time as I see prices continuing down due to a growing supply and weakening demand.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I knew it would happen.
that's interesting.
I don't see the stock market coming back strong in the near future either, however, my mutual funds are doing fine!
Liberty: Parent of Science & Industry
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Wake up call for those that don't enjoy the luxury of living in Baleyville
As I said: Unless you are living is some bubble or alternate universe...
No offense, derryb, but if you read what the editorial says, you have to wonder about it's motives. First he cherrypicks articles that point to the conclusion he wants. Denounces any other view (the MSM boogeyman, CNBC) and really says nothing of substance. And you offer it up for, what? To convince us to run for cover?
I recently saw "To Big to Fail" again on HBO a few days ago. Riveting - because it is true. And that was the last administration! They did see it coming, but there was really no way to stop the housing bubble without causing it to burst - and then they'd have to take the blame. All through the 2000's the talking heads kept saying that the recovery was built on the housing boom. "It can't go on forever, can it?" I recall hearing, oh around 2005.
As to the OP:
If you look at the gold chart, the highs are lower each time and the lows are getting lower too. I think we are in a slow down trend. I also think real estate is very attractive, given the low rates and a flattening of the foreclosure rate.
<< <i>No offense, derryb, but if you read what the editorial says, you have to wonder about it's motives. First he cherrypicks articles that point to the conclusion he wants. Denounces any other view (the MSM boogeyman, CNBC) and really says nothing of substance. And you offer it up for, what? To convince us to run for cover? >>
I never take offense on the boards and I respect opinions that differ from mine. Offered up for your reading pleasure. Hopefully you will see the warning.
Per the writer: "These articles are not written by a bunch of angry uneducated bloggers but by money managers, investors and financial writers. All are people who got it right leading up to the meltdown of 2008, and my bet is they are right again. The mainstream media (MSM) told you after the 2008 crash that “nobody saw that coming,” which is a bold faced lie that will not work again."
You will notice the highly respected Jim Quinn provides one of the opinions. Differing opinions are what help the thinker to form his own.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Shall we conclude that newsletters have to sell themselves?
And yes, the country is in a heck of a mess.
But Armageddon is not around the corner.
The heck of a mess we are in is much worse than many want to believe.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
All those articles are the same: Woe unto you! Doom to all! There is no escape! Warning warning, alarm alarm, this is an EMERGENCY!!
Precious little good advice is ever offered about what to do
Liberty: Parent of Science & Industry
<< <i>Real estate is going to zero and gold is going to infinity. Everyone should sell their houses now and move into a shelter made of stacked metal bars. >>
LOL.
It's a shame that 46+ million people are on food stamps. Ever see what most food stamp people buy in the store? Not a pretty sight. FWIW, I think 80% of Americans live paycheck to paycheck. I don't think that will ever change.
To paraphrase Gen Honore, those people(the ones on the public dole) are stuck on stupid. I don't worry about them. They will never go away and I can't do anything about them.
IMHO, the only way for that group to shrink it's numbers is for a politician or group of politicians to grow a backbone and tell those people to straighten up and fly right. Unfortunately, there is no call for that right now. I kinda think things have to get worse before they can get better...if you know what I mean. Like a drunk finally having to live in the gutter before he realizes the importance of being sober.
What about the 2+ years from 1978, 1979, early 1980 when interest rates systematically doubled yet gold went up 5X and silver 10X? The 6 month rule didn't work well there. Once "real" interest rates get back to positive then PM's will have something to worry about. Nominal rates don't mean all that much. More for show than for.
The facts don't match the rhetoric......The recession has been over for a year. The definition is :"The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)"
The GDP figure has been rigged as long as the CPI has. A key component of GDP is the "deflator" which is supposed to factor out all inflation. It doesn't. It takes additional statistical liberties that the CPI could only dream about. Anyone making investment decisions based on CPI, GDP, and NFP's will come to vastly different conclusions than using real world analysis. There are numerous highly paid economists who get to "interpret" the govt's numbers for leading corporations so that they can act on real data, not fluff. The
Those BJ Corvette results are most impressive. But this has even less real-world relevance to financial markets than a Legend show report. Those Vettes represent the top 1% (or .1%) of the collector car market. I've watched the results of more "mundane" $5,000 - $125,000 cars and they aren't anywhere near as impressive. I watch a ton of collector cars in the $15K to $60K range cycle through Ebay....going nowhere. It still takes a lot of effort to find a buyer. BJ is the biggest US collector car auction drawing in the biggest of spenders who will buy regardless of economic conditions. Even in this economy there are still bankers, hedge fund managers, and CEO's making money hand over fist. They can afford to buy even if Joe Six Pack cannot. Other car auctions like Mecum and RM are more indicative of what the typical car enthusiast is doing. A Rembrandt, Picasso, Degas, and Matisse will do fine in any market.
The top 1% of the finest cars will always find good homes, just like the top 1% of the finest coins. The problem with the current markets is the middle of the road and low end money is not buying and therefore the other 99% of collectibles are going begging. The bifurcation continues. Legend and Barrett Jackson can sell their wares, it doesn't mean the average dealer is doing as well. And fwiw collectible prices ran up nicely from 1977-1980 while economic conditions/stocks/US dollar were floundering. So rising Vette and early gem US copper prices doesn't mean all is well. It might actually mean the very opposite for the economy. A lot of liquidity has been injected into the world system since last summer and is still showing its effects. As long as the injections keep coming then Vette and Chain cent prices will continue to rise. I would't bet again an election year where the primary focus is to get re-elected at any cost. So the injections should maintain, at least until early November.
NU, no matter how the banks try to handle the impending overflow of pent up mortgage foreclosures it will be a drag on prices. The Phoenix area can certainly be booming relative to
other locations.
roadrunner
<<Those BJ Corvette results are most impressive. But this has even less real-world relevance to financial markets than a Legend show report. Those Vettes represent the top 1% (or .1%) of the collector car market. I've watched the results of more "mundane" $5,000 - $125,000 cars and they aren't anywhere near as impressive. I watch a ton of collector cars in the $15K to $60K range cycle through Ebay....going nowhere. It still takes a lot of effort to find a buyer. BJ is the biggest US collector car auction drawing in the biggest of spenders who will buy regardless of economic conditions. Even in this economy there are still bankers, hedge fund managers, and CEO's making money hand over fist. They can afford to buy even if Joe Six Pack cannot. Other car auctions like Mecum and RM are more indicative of what the typical car enthusiast is doing. A Rembrandt, Picasso, Degas, and Matisse will do fine in any market.>>
Those are a compilation of 7 different auctions in January of this year. I am by no means an expert on these cars but I can remember sitting with two of my friends in the June 2010 Mecum Bloomington gold auction in St. Charles where almost no cars sold. One of those guys owns two Chevy dealerships and the other has 8 figures in the bank...either one could afford any car in the auction, both own small museums and neither was bidding in JUNE 2010. They are both in the market now. Bobby is selling cars and Tommy opened a cement plant in Lima to poor the foundation for Ford at their new plant expansion. AND as a side note...I am selling a lot of stuff to Michigan people so some of Michigan is starting to work enough to have money for their toys. I know one thing for sure...there is a lot of pent up demand in the auto business. Both, Old car restorations and new go to work cars .
My point is.......while in many areas...the economy suks...it is starting to move off dead center. A company will frequently stress their employees(with OT and so unemployment #'s stay high) until they start hiring new people...and some companies are hiring.
IMHO, greenspan waited too long to raise rates after the 2000-01 downturn...and I suspect that was a large contributing factor to easy money mortgages and the ballon in RE prices. Hopefully Uncle Ben learned from this, even though the FED has said..a couple of more years of low rates. Actually, really doesn't make any difference how much rates are, few can borrow.