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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (1496)	8/5/2005 2:54:13 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 24224

Peak Oil Jobs No.2 The Real Estate Agent Roland Watson I remember the last housing bust back in the early 1990s all too well. I stepped onto the property ladder with a modest two bedroom house costing about £65,000 ($118,000 today) in the outskirts of a small town. It was December 1990 and the market was still falling around the London area as I hesistantly poked my toe in the turbulent real estate waters. The lady who sold me her house was no longer occupying it. She couldn't sell it quick enough and her newly wed husband preferred she stayed with him. Seven years later I sold the house and only made enough profit to cover the fees. A look at property websites for the area today shows prices in the ballpark of £150,000 ($270,000) for a similar house. At that time, various popping noises were heard across the world as real estate bubbles exploded in peoples' faces and house prices plummeted by 20%, 30%, 40% and even 50% in some places. There were various repercussions, not the least being personal bankruptcies and people prevented from moving lest they had to pay off the shortfall in their mortgages. Mingled with the howls and anguished cries of the "buy at the top" homeowners was the loud lamenting of another group going by the name of "real estate agents". They had spent the previous five years or so raking in the money from commissions on over-inflated house prices. When the blast wave of the collective bubbles hit, their offices were laid waste and also joined the ranks of the "For Sale" legion. But these things go in cycles, right? Yes, there appears to be a cycle in the construction industry called the Kuznets cycle which runs about every 16 years or so. The previous bust was in the early 1970s and we certainly are due another almighty bang now. But if calculations are correct, another housing peak may be due in the decade of the 2020s and real estate agents will once again be dancing barefoot through the daffodils singing "We're in the money!". Yes? No. If Peak Oil has its wicked way, real estate agents will be doomed to dance on thistles for the next few decades. It seems we have the unfortunate juxtaposition of two waves. One is the downwards phase of the property cycle and the other is the downslope of Hubbert's Peak. In physics, we were taught that when two waves met out of phase they would "destructively interfere" and cancel each other out. In our case, the two waves will be meeting in phase and "constructively interfering" to create a wave of greater amplitude. In other words, bye, bye real estate for the next 30 years or so. The next scheduled top in property prices in the 2020s will be swallowed up like a sardine by the big barracuda of Peak Oil. After that in the 2030s there may be some buying opportunities. Let me point out that I am talking in constant dollars here. When Peak Oil begins to cause long-term GDP contraction and fiat money instability, galloping inflation may give the appearance of rising prices but it will be an illusion. You will know it is an figment of your imagination when gold and silver are galloping even faster than house prices. And so back to our real estate agent. There will be some hope for the more alert amongst them, but it will involve moving the business to letting and managing properties rather than selling them. The years after peak oil will see a migration back to rental properties as incomes drop in real terms. Also, people will live together in larger groups, so the market will shrink in terms of turnover as well as price. Only the toughest will survive this form of business. The real estate sector in its present form will not survive the next 30 years. An entire generation is going to miss out on such terms as "offered for sale at" and "now in escrow". Given the ridiculous boom and bust prices we have seen fiat money generate, that may not be such a bad idea. I invite comments and questions at my email: mailto:newerainvestor@yahoo.co.uk Roland Watson June 28, 2005 gold-eagle.com