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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: A Horse With No Name who wrote (13538)	7/7/2003 1:38:31 PM
From: austrieconomist	Read Replies (2) \| Respond to of 39344

My "big brother," who reads this thread religiously, would get a kick that anyone would be interested in what I have to say. Putting that aside, plus factoring in the trauma that you might actually be making a personal financial decision which takes into account my opinion, I'll say this. (1) Real estate valuations are a combination of (a) national, (b) regional and (c) local factors. Local is "location, location, location", regional might be industry (tech-west coast) or state (California) and national is primarily interest rates. Overlay that on economic factors in general. (2) I've seen several studies that suggest that housing in general is not in a bubble. One in particular that caught my eye pointed out that the monthly payment obligation of today is not materially different from most other time periods. However, the debt load is greatly increased (owners today own only 55% of the home compared to 70% in 1972, for example) which is offset by the diminished interest rate. (3) I think it comes down to an assessment of the economy and the level of interest rates. It's unknowable, of course. I do think that the Fed will use its utmost efforts to keep rates low through the 2004 election. However, the Fed is not the last answer: the last Fed cut of a quarter point has been followed by an INCREASE on the long bond by about a half point. And, buying a house is more than a year and a half holding proposition. The Fed has hinted about buying in long bonds but so far it has been bluster. Maybe that will change. And what happens with rates when the rest of the world becomes less anxious to accept dollars for economic transactions? Rates have to go up, or the dollar has to go in a free fall in such a case, or maybe some of each. And what is your situation? If I was more comfortable in the stability of my job situation (no likelihood of transfer or job loss), I would be relatively more comfortable in buying. With all the economic risks known to the posters to this thread, if I were buying I would tend to look for something with the most salable demographic in my locale. I do have to conclude that I have no opinion on your decision. I am a risk averse individual and am already locked into my present home. I do not know what my decision would be today thinking about a purchase. Best wishes.