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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (27607)	3/23/2010 4:33:11 PM
From: Real Man	Read Replies (1) \| Respond to of 71477

Yes, but one exception. A distressed house is cheap if it is 50% below current prices, not peak prices. I've seen a few of these in 2008, and these were the properties that were predictably gone in a nanosecond. I don't see them now, but I expect to see them again, as there is a pipeline of distressed properties. Of course, these properties are not showcase and must be inspected. Yes, you can make a bundle in equity virtually instantly, and unfortunately the pipeline that is holding distressed properties off the market is about to burst. As for housing in general, much will depend on employment. Probably, a lot more at this stage will depend on that than on ARM resets.

To: GST who wrote (27607)	3/23/2010 4:55:50 PM
From: Real Man	Read Replies (1) \| Respond to of 71477

Cost to build is a function of demand and commodity prices. Certainly, it came down substantially lately. However, if the Fed keeps printing money, it will go up again. As for people not being able to afford the price, you'd be very surprised to learn how high Re prices went in some developing countries, where average salaries are well below US salaries. Housing in Europe is also quite a bit more expensive than in the US, and it is sky high in Japan (after declining for 20 years!) Housing not being affordable in part reflects declining standard of living. I agree with you, but both inflationary and deflationary dynamics will likely be present. What this means is that, like equities, housing is likely to decline in real terms for a long time, but what will happen in dollar terms is less certain. In my view housing will bottom in dollar terms in 1-2 years, once the next wave of defaults subsides and deep distressed bargains disappear.