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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (24781)	10/24/2004 10:34:59 PM
From: SouthFloridaGuy	Read Replies (1) \| Respond to of 306849

The markets always tend to do what's most painful and in the case of debt holders that means deflation. However, if deflation were imminent one would see it manifested in widening corporate bond spreads and/or falling commodities prices. Neither is apparent. Instead we are truly in what the Fed describes as a "soft patch". So what is the catalyst for what we all think is going to happen? Well it's what many Economists like Kasriel and Roach have been shouting about - the $USD. The $USD's depreciation will cause commodity appreciation which will be further exacerbated by hedge fund/institutional speculation. Oil prices have barely dent the US economy as Greenspan said. That can only mean one thing - they will continue to go up until they do make a difference. We could easily see oil at $80 barrel by next summer in my opinion. Then I believe Greenspan will be saying something different. This supply curve shock coupled with massive debts carried by US citizens and many corporations will finally the straw that breaks the camel's back and will send the U.S. into a major deleveraging recession and all that comes with it; deflation, unemployment, real estate/stock market crash. Conclusion: 1) Stock Market and Real Estate market are finished. 2) Commodities are the place to be as a flight to quality play from a declining $USD. But they too will get killed once the recession rears its ugly head next summer. In a deflation, cash will be king as will US treasuries.

To: Elroy Jetson who wrote (24781)	10/25/2004 1:37:49 AM
From: X Y Zebra	Respond to of 306849

are real estate developers, always living with huge debts so long proportions are kept and I suspect considerable equity is created at the end of the construction period, then short of an immediate collapse, they (and you) ought to be in fine shape... i would be a little worried particularly in the office market. I would switch some holdings to self storage, multi-tenant industrial and beach land (even if it is off-shore) ... but that's me. self storage (short of a total collapse in the financial world), ought to provide a comfortable and steady cash flow, with a much better return than cash/t-bills etc. (plus considerable appreciation, particularly if you were the developer)... not for nothing they are known as cash cows. in this segment it would pay you to be the developer as there are very few available properties with reasonable returns; demand for same is increasing, as people begin to re-direct away from the office market.