From a trader's point of view, I still think housing has still pricing power. Let me explain.
Although the Feds have been raising rates, mostly in my opinion to support the US dollar, which as we all know has been losing ground for the last few years, they are faced with putting a severe brake on our fragile economy, or stop raising rates.
There are two issues that tell me the US economy is very weak.
First, manufacturing production came to a standstill for a while. The last GDP report shows inventories at the tone of $50 billion for a couple of months, then $6.8 billion (if memory serves me right). So, GDP growth was in a large percentage, 2.3 out of 3.4%, due to inventory sales.
Second, the Baltic Dry Index, or an index for dry cargo shipping tariffs, shows a fall from 4600 to 1600, since November 04, which tells me, raw material shipments have fallen worldwide, confirming the US inventory buildup.
The liberalisation of the Yuan, as reported, and its aftermath, liberalisation and revaluation of several other Asian (and the Euro) currencies, has the immediate effect of a US dollar devaluation.
And this is my point. The big issue is the continuation of the US dollar devaluation.
Foreign central banks are dumping US dollars, and Greenspan faces a halt in the US economy, which will force him to stop raising rates.
If I'm correct, the best thing to do is take a hefty debt in US dollars - future monopoly money - and acquire real assets.
Real estate fits the bill. More so, with the double $500,000 tax exemption on profits.
In regard to Rotger, that is good advice except when everyone does it or does it for a long time. In which case the demand is artifical and prices of the assets crash at some point.
It also assumes inflation as the result of a devaluation when deflation could also be a result. In which case is king and RE is the fools gold.
In regard to Rotger, that is good advice except when everyone does it or does it for a long time. In which case the demand is artifical and prices of the assets crash at some point.
I agree, but since the dollar devaluation has been reignited with the Asian currency revaluation, housing prices are getting a second air.
From a trader's point of view, I still think housing has still pricing power. Let me explain.
Although the Feds have been raising rates, mostly in my opinion to support the US dollar, which as we all know has been losing ground for the last few years, they are faced with putting a severe brake on our fragile economy, or stop raising rates.
There are two issues that tell me the US economy is very weak.
First, manufacturing production came to a standstill for a while. The last GDP report shows inventories at the tone of $50 billion for a couple of months, then $6.8 billion (if memory serves me right). So, GDP growth was in a large percentage, 2.3 out of 3.4%, due to inventory sales.
Second, the Baltic Dry Index, or an index for dry cargo shipping tariffs, shows a fall from 4600 to 1600, since November 04, which tells me, raw material shipments have fallen worldwide, confirming the US inventory buildup.
The liberalisation of the Yuan, as reported, and its aftermath, liberalisation and revaluation of several other Asian (and the Euro) currencies, has the immediate effect of a US dollar devaluation.
And this is my point. The big issue is the continuation of the US dollar devaluation.
Foreign central banks are dumping US dollars, and Greenspan faces a halt in the US economy, which will force him to stop raising rates.
If I'm correct, the best thing to do is take a hefty debt in US dollars - future monopoly money - and acquire real assets.
Real estate fits the bill. More so, with the double $500,000 tax exemption on profits.
So, I say, hold on to your house.
If we expect a dollar devaluation wouldn't we be better off buying assets abroad ? Stocks, Mutual Funds etc?
In regard to Rotger, that is good advice except when everyone does it or does it for a long time. In which case the demand is artifical and prices of the assets crash at some point.
It also assumes inflation as the result of a devaluation when deflation could also be a result. In which case is king and RE is the fools gold.
why would currency devaluation cause deflation?
If we expect a dollar devaluation wouldn't we be better off buying assets abroad ? Stocks, Mutual Funds etc?
No, for two reasons:
1) An asset is an asset. Foreigners are buying RE in the US because it's cheap for them.
2) If the world economy slows down, you do not want to buy into a company's dull performance, no matter where they're from.
In regard to Rotger, that is good advice except when everyone does it or does it for a long time. In which case the demand is artifical and prices of the assets crash at some point.
I agree, but since the dollar devaluation has been reignited with the Asian currency revaluation, housing prices are getting a second air.
That was my point.
It also assumes inflation as the result of a devaluation when deflation could also be a result. In which case is king and RE is the fools gold.
It is very simple. If the dollar becomes monopoly money, an ice-cream is going to cost you a million bucks. Ask any Argentenian?