exchange with Frank Lechner (re: his GoldEagle article)
his article appeared a few days ago, with invitation to email
his thesis was that Real Estate might continue rising until 2007
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From: Jim Willie CB
To: <whynotgold@msn.com>
Subject: quick question on Real Estate
Date: Wed, 11 Dec 2002 15:24:18 -0500
Hi Frank,
nice article on 321gold
the USGovt is surely going to try to reflate
but they will encounter significant obstacles as debt liquidation, lost
pricing power, and soon higher rates might interfere with their plans
as they allow the USdollar to come down, the surprise might be higher
longterm rates, not lower
that is what I anticipate
so my question is this:
if jobs continue to be shed by troubled corporations, and households
retrench from high debt levels and reduced job security, wont real estate
prices come down gradually?
Greg Weldon is quoted by John Mauldin as expecting a sudden
illiquidity-driven 15% drop in RE prices, followed by 3-4 years of "giving
off gas"
I expect something similar
Richard Russell expects that next year the emphasis will shift to income
insecurity, and away from low interest rates, as the price supports for RE
prices erode
I agree whole-heartedly
I anticipate the USGovt will not be capable of playing off a designed
script
not with the extreme hazards from Monetization efforts
I appreciate any response
thank you
/ Jim Willie CB
-----Original Message-----
From: Frank A Lechner [mailto:whynotgold@msn.com]
Sent: Thursday, December 12, 2002 2:30 PM
To: Jim Willie CB
Subject: Re: quick question on Real Estate
Hi Jim,
Firstly, I agree with the higher rates over time issue. Yet, go back and
look at the mid-70's, real estate continued to rise even in stagflation and
eventually high inflation conditions.
If anything, without major job losses, real estate should tread water in the
near future. We will not see marked decreases in RE until the deflationary
winter hits in full force. The charts over time show this. Some areas will
decrease, but on a macro basis, no.
The illiquidity will be in the mid range homes if any. If a person is asking
300K for a home and the market is offering 275K, yet the same home 5 years
ago sold for 225K, then is there truly a setback in pricing? I do not
believe so, just an overzealous seller.
The government will be flying blind into this storm, reacting to events
instead of planning future events.
Thanks,
Frank
sent: Dec 12, 2002 (2:35pm)
Frank,
thanks for your reply
much appreciated
tend to agree all through
but I believe jobs will be in greater jeopardy than currently seen
/ jim |
