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Non-Tech : The Woodshed -- Ignore unavailable to you. Want to Upgrade?

To: nspolar who wrote (2112)	3/8/2004 8:23:14 PM
From: morokko65	Respond to of 60910

Nspolar, Farmland I don't know. I have a nice 10 acre hobby farm in Iowa for sale with a decent house and big barn for $129K, but commercially viable land I do not know. Typical prices in the US Midwest run from $1500 to $4000 an acre last time I checked, for 40 acres or greater. I think higher food prices may take a while to hit land values, as it is my understanding that farms are currently under-utilized. Higher rates sometimes cause residential values to climb. Inflation and rates were high in the 1986-1989 pop when prices in No California basically doubled in 4 years. When the $TNX popped last July, there was a buying panic as first timers were afraid to miss the boat. Steve Roach's premise was that we have an inflation bubble in housing that creates the conditions for a deflationary collapse. He thinks its not too late for a 200BP shot of vaccine to reduce the bubble fever. I personally think its too late. The mortgage carry trade and resulting consumer party IS the economy. Once that goes away, the King has no clothes and the dollar is at 60 in a hurry. If the dollar and the deficit put upward pressure on the short end of the yield curve and 3% purchase money disappears, a lot of potential buyers will disappear. Right now the prices are climbing like a stock gapping up. Recent sales are in the $380 range and current listings are all at $420K+ for one property I am looking at. If all the ARMs made during 2003 roll to higher rates this year and deliquencies increase, lenders will get jumpy and tighten lending criteria, which will peel off another group of buyers. I think that the higher loan amounts, higher LTV ratios, higher debt-to-income ratios and emphasis on short-term rates in mortgages foster a quicker change in psychology once the easy money starts to evaporate. It will one day be vulnerable to an impulsive type decline. Historically Real Estate declines unfolded relatively slowly. People will be underwater much faster this time around due to the higher leverage, and will have less incentive to keep the underlying asset. The last 2 frenzied RE periods in San Francisco (1986-1989 & 1997-2000) each lasted about 3-3.5 years. This buying frenzy began in 12/01 after the post 9-11 Fed easings, so we are 27 months into this party.

To: nspolar who wrote (2112)	3/8/2004 8:43:11 PM
From: skinowski	Respond to of 60910

What happens to housing prices in times of inflation? Hopefully, someone who is more expert will answer this question - which, I think is an important one. My own - anecdotal - impression from the 70's - early 80's is that prices do go up, but they lag - and do not keep up with inflation. The result was that RE became tremendous value. OTOH, in countries where there was a period of HYPERinflation, like Israel, Eastern Europe, Argentina - anyone who bought RE with fixed rate financing before the onset of inflation in effect made a killing, since their payments soon became trivial. They got their RE for nearly nothing.