Real estate question

Detroit may not have jobs, but Las Vegas is running short on drinkable water .  Good luck figuring that one out, they can extract oil out of just about anything. Water is another story, and it's VERY HARD to transport.  Vegas falls back to nature in the next 40 years, too many other states legalizing gambling.  Sin City will have to step their game up and start allowing something else that others don't offer (up the ante on prostitution and legalize it in Vegas)

Real Estate Question

Answer, AVOID IT LIKE THE PLAGUE


link

Many people who want or need to sell their homes haven’t put them on the market yet because the outlook for sales has been poor, he said. “It will be mid-2011 before we see the market in balance,” with no more than a six-month backlog, he said.

The National Association of Realtors reported yesterday that the number of previously owned houses on the market in April climbed 8.8 percent to 3.97 million, a 10.2 months’ supply.

Sokol suggested government efforts to ease the crisis are actually drawing out the recovery. “We really need to let the economics work through the system,” he said.

It is still difficult and costly for businesses to borrow, Sokol said, creating “headwinds” for recovery. He predicted the U.S. unemployment rate would rise above 10 percent from April’s 8.9 percent.

Peter Thiel, the co-founder of PayPal who now heads the $2 billion San Francisco-based hedge fund Clarium Capital Management LLC, told the conference the stock market’s recent gains will fade and the price of “long assets” such as houses will continue to fall, while Federal Reserve pump-priming will mean “inflation in all the wrong places.”

know that if you buy a house now, it will drop in value tomm., AND might not be worth more than your purchase price for more than 10 years maybe 20 maybe NEVER

  Ask yourself what the likelihood is that scared and soon to be unemployed people will return to what was obviously a bubble, a bigger, dumber bubble than dot com or telecom bubbles. People are stupid, but not that stupid.

Property is a hedge for inflation only if you can sell it. And liquidity is to say the least constrained, and will remain so...

  and frankly those McMansions and their locked in energy demands are going to look less and less attractive as oil returns to +100  a barrel levels, and we as a nation are going  to be too green to use coal...

 

 

 As much as people were/are horrified by the stock market, they are even more horrified by the real estate market.And that particular market is not going up like the stock market (yes, I still think it is only a bear market rally, but it is going up...whereas the RE market is going to continue to lose)...the decline in home prices is not finished, far from it.

 HVAC systems are more efficient. But, if, like the house that was built about a mile from me, which requires four heat pumps, has no trees around it, and has enormous cathedral ceilings that will guarantee wasted energy use for the life of the house, so what? Throw on the fact that the coal fired electricity that it will use will go up astronomically in price within a few years, and you have a beached whale of a house. There are, by the way, entire developments with that type of house in the metro area here, and almost all are ghost towns.

 Long term investors, at least the ones I know, are putting their money into hard assets, or failing that, a basket of currencies and gold...the dollar, no...or they are happily in cash or TIPS.

 There are deals (no doubt) to be had in RE, but the question is, why buy when prices continue to trend down? Too much supply, increasing numbers of foreclosures,  and decreasing demand as people get laid off, which will loop back and result in more foreclosures....not a good reason for me to park my $$ into an illiquid asset.But that is just me.

 

 I do not equate RE with housing...Commercial RE is in deep trouble and will remain so.In fact, I suspect it has much farther to go. More bankruptcies=lots of empty strip malls and office complexes.This area is littered with them.The commercial owners I know are deeply pessimistic, and are in fact some of the most bearish people I know.

 Gas may be the way to go...too bad the developers have not been allowed in on that secret. But the house was erected at the precise top of the market, so that builder and those like him don't know much anyway.

 One final note:you have to have cash  or beyond excellent credit to take advantage of this "buying opportunity." That is wonderful news for...people with cash.

  Banks are not lending (despite what they claim)...so while being a vulture investor is fine for those already flush, and as I said, no doubt there are values to be had, there are plenty of places I personally would rather be than in an illiquid market  that is  post bubble, a bubble that has cost this country trillions.No thanks.

 But again, I am not oriented to real estate, and people called me crazy when I laughed at house prices being asked for and received in 2004...I never participated in the bubble, but I get to pay for the idiocy of others....what else is new?