Rande, you asked <<How long will the Real Estate market hold up?>>
I can't contribute much useful thought to the question of shorting stocks, but I have spent a great deal of time pondering the real estate question, based on my own long-term ownership of real estate, my knowledge of what's going on here in the Wash DC area with regard to real estate, and just intuition on this subject in general, based on observing recession-era markets in the past and working in them as a real estate broker/salesperson.
My humble conclusion and opinion is that real estate should and in many cases, IS, being regarded as one of those safe havens much like silver, gold, baseball card collections, etc.
If homeowners right now are frightened by the state of the economy, or their job prospects, or the threat of terrorists or other current events, the fact remains that many of them are locked into one of the best positions they can possibly be in right now.
I'd venture to say the most frightened homeowners are those who have only owned for a short time, and they probably are borrowing on exceptionally low financing rates. These people can't sell, pay the cost of selling, pay the cost of moving, pay the cost of buying something else or renting something, and make out any better than they are doing right where they are now.
Now let's consider the factors which fuel a real estate market up or down...
Corporate relocation is probably coming to a big halt, due to cost and uncertainty--relocation keeps homes bought and sold all year round.
I'd even venture to say divorce rates will decline in this environment, because it will be WAY too expensive to go thru that type of mess and come out with a dime. Divorces and remarriages tend to fuel the real estate market (i.e., turnover of homes bought and sold) as much as corporate relocation and new families seeking bigger living quarters.
Lack of sellers will depress real estate inventory. Lack of inventory is exactly why the market has gone up in the past few years.
As long as there is no excess inventory relative to demand, the market will be relatively stable.
The remaining sellers who want or need to sell will reduce their prices, creating opportunity for buyers who want or really NEED a place to live.
I don't see the real estate market going through any more of a shakeup than it ever has in the past. There have always been up and down cycles in that industry.....this is another one of those cycles--nothing more, nothing less.
My opinion. Offered at no cost. |
