real estate is a combo hard asset, indebted asset
this is one tough mothah to forecast
the massive move in 2000-01 into real estate made 2 statements
1. beginning of movement to hard asset shelter
2. bubble migrating into safehaven, protecting consumers
real estate depends on two things generally
1. low interest rates
2. strong employment
a bubble is a bubble is a bubble, though
and if 80-90% of the price is supported by debt, then the entire game is largely built upon shakey debt
I expect mortgage rates to get back up again
by 2003-04, I expect rates to be near 8%
they are now under 7% again for many offerings
when the USdollar picks up speed downhill, rates will rise
I see this happening as predictably as the rising sun
not only with mortgage rates hurt housing, but jobs will be lost
the next deep recession comes in 2003 and cuts deep in 2004
I see housing in a correction by then
how on earth can it be avoided?
housing has risen 100% in most cities since 1992
a correction is necessary, healthy, and unavoidable
but this time, with the dollar down and housing declining, we will have added fuel to the downhill fire
much depends upon Uncle Alan GreenFlation
if he allows unbridled price inflation, then housing will continue up slowly, but at a price
we would see hyperinflation days of yore returning
e.g. 9-12% annual CPI inflation
I dont think housing prices can withstand 10% mortgages
if Uncle Fat Albert raises rates, choosing to attack inflation, then housing will be whacked harder
we would see inflation with putrid stagnation
regardless of AG actions, I see inflation or hyperinflation
and recession or deep recession
my two silver dimes worth
/ jim |
