Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Tommaso who wrote (42278)	12/6/2005 8:55:36 PM
From: Jim McMannis	Read Replies (2) of 116555

Filmore, Tomasso et al... RE:"There comes a time when what has to be "tolerated" is beyond anyone's control, and multiple bankrupcies and foreclosures and forced sales cannot be very good for real estate prices, to put it mildly. Although I do not see how old-fashioned, pre-1940s, deflation is possible in the United States, I can certainly imagine many real estate properties being sold at prices that they commanded only 2-3 years earlier--and in some markets that means a 25% or larger markdown. Do you consider 25% not to be "severe"?" I agree, maybe it's time to define just how much down is a "correction". I'm under the impression that the powers that be will fight it every way they can. I'm also predicting that the R.E. market won't fall off a cliff until we see mortagages up near 8% or better. Not that the rates will get that high. Not as long as their are mortgage interest rate deductions and cap gains tax breaks. On the way down though, watch out because you can't take more than a net 3k loss every year. Most flippers don't know that.

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