Updated July 6, 2010 - Real Estate is a High Order Capital Good and will be adversely affected by the economic depression, the over-supply, higher interest rates, lower real income and aging Baby boomers...but any crisis also offers opportunities and opportunities we have if we can buy NEW Homes at half the price it would cost to built them today......AND Real Estate is better than Fiat Paper Money and Treasuries.

Updated January 4, 2010

The main difference between Real Estate and Stocks is that it usually takes a generation before real estate losses are recovered. Stock market losses occur more frequently, can be severe (-50% in 2008), but recovery of all losses often happen in less than a year time.

Previous Tops & Bottoms in Real Estate:

• Whatever is written and said all over the world, we expect Real Estate prices to continue to slide down in 2010 and 2011. A small correction is however possible in 2012 but then the slide will resume until 2033. Real Estate is a High Order Capital good and it will be definition be affected by the recession and depression.

"A young  couple with excellent credit and a solid income who bought an average three-bedroom house for $ 585,000 in 2006 is paying $ 4,300 per month. Because of the bursting Real Estate bubble, their house is now worth only $ 187,000 - though they till own $ 560,000 on their mortgage. Just to recover the equity will take 60 years!

Underwater homeowners can either continue to pay $ 4,300 a month. Or they could go into foreclosure, rent a place for $ 1,000 a month, and in a few years buy a home at a pre-bubble price of $ 180,000 with monthly payments of $ 1,200."

September 23, 2009

A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound...click here for more...  

November 27, 2009 - This is the REAL PRICE evolution of Real Estate...(expressed in Gold)

May 22, 2009 - With this huge supply of new homes, there is no room for improvement

May 1st, 2009 - Danger as we move out of the Eye of the storm into the 2nd Wave!

More bad news for Real Estate. The number of foreclosures in the US keeps going up. What people are looking at is the schedule of mortgage resets for option ARM loans [also called liar loans]. These will begin to reset in a couple of months and the process will not peak before 2011.

April 22, 2009 : in the USA 600,000 foreclosed houses are kept off the market by the lenders.

“’We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,’ said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. ‘California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.’

According to the Wall Street Journal: “Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can’t meet their loan payments, up from about 1.7 million in 2008.” (Ruth Simon, “The housing crisis is about to take center stage once again,” Wall Street Journal)

A similar pattern is used by Spanish banks. (Spanish banks over invested in Real Estate as they were sure trees would grow all the way into heaven)

April 17, 2009 - the next shoe to drop is Commercial Real Estate -

Updated March 31, 2009

This is a very interesting long term chart of Real Estate. To see just how unusual recent price activity has been, take a look at Yale economist Robert Shiller's inflation-adjusted housing chart, going back more than a century.

Posted March 31, 2009

The Real Estate Boom was nothing more than a desert mirage. The direct result of fractional reserve banking and the creation of money out of thin air.

• The Real Estate crisis and the freefall of home prices is expanding to commercial properties. Other countries like the UK, Spain, France, Belgium, Morocco, Canada, Costa Rica, Belize, Austria and East European countries have joined the USA as their real estate bubbles also are deflating.

• Trees nor Real Estate grow all the way into Heaven!  I understand that for many it is extremely hard to understand what is happening right now as a Real Estate cycle is in most cases a 'once in a lifetime experience' and they saw nothing else than rising prices (apart from some short term corrections).  Even the Paradise of Real estate: the city of London, Manhattan and the paradise resorts in the Gulf petro-monarchies are becoming a real estate hell.

• The real estate crisis has become a self feeding monster.  The Real Estate crisis is amplified because banks keep reducing the number of mortgages and real estate loans to potential buyers.

  As a rule of thumb, in a secular real estate bear market Real Estate prices fall until the price equals 100 times the rent. Another rule is that a Home should cost no more than three times annual household income. Purchasing a house creates dead capital. It does not create jobs once the construction is terminated, but consumes capital through the financing. The wealth created by Real Estate is mainly an illusion created by currency movements. (South Africans bought automobiles, drove them a couple of years and sold them at a profit because the Rand used to be so weak). The harder it gets to borrow money to buy a home, the harder Real Estate prices will fall. Best case scenario, the Debt crisis and the US-Real Estate won't bottom until 2011 and probably 2017. For the EU and other countries, as the crisis started with a delay, expect to see the bottom with the same delay. For the EU this could well be 2014-2020.

Posted January 27, 2009

Monetary inflation is even more deceptive - or dangerous - when it is working with asset deflation.  

What happens when monetary inflation meets asset deflation is not understood by most of the population. Hidden within the convergence of those two fundamental forces will be the likely "solution" to the current housing crisis, as well as opportunities for astute individuals to protect and even increase their net worth during a time of falling real home prices."

Posted January 9, 2009

When I discussed the imminent  crash of the Japanese Real Estate and Stock market in 1989, experts said I was crazy. Japan was an overpopulated island and for this reason alone a Real Estate crash would and could never occur. And yet, 15 years later, a house selling for 220,000 yen in 1989 can be bought for 80,000 yen. Not only has Japanese real estate crashed, but the Yen has also...a terrible shock for all 1989 non-believers. Today similar conditions occur for British real estate owners: on top of sliding British real estate prices, the Pound is also crashing.

Stock markets can come down swiftly and loose 50% in only weeks time. Traditionally, they recover quickly (often in less than 6 months' time). Historically, Real Estate markets need about 75 years to recover. In some cases, like Florida, they never recover.

Posted December 22, 2008

December 2008, the commercial Real Estate bubble is - as expected - bursting. In November analysts at Credit Suisse said two big commercial mortgages that had been packaged into securities in the past year were likely to default. The rapid deterioration of these loans fed worries that the weakening economy and higher unemployment rate would drag down the $800 billion market for commercial-mortgage-backed securities, or CMBS, which so far has withstood the credit crisis with low delinquency rates.

Updated March 17, 2009

Today one can buy Real Estate below $ 10,000. Some of these opportunities are wise investments! The housing market for the next several years will undoubtedly take a severe hit. In the end the torrential flood of homes that come to market for sale will be bought at much lower prices by my children as well as yours at prices which are affordable. Those who count on 'a dip' in the market will be amazed how deep the Real Estate market can slip!

Posted July 23, 2008

Only $ 5,000 for a three-bedroom house! This is a foretaste of what Spanish builders may expect in the near future.

July 23 (Bloomberg) -- Fannie Mae, the largest U.S. mortgage finance company, couldn't find a buyer who would pay $6,900 for the three-bedroom house at 1916 Prospect St. in Flint, Michigan. So broker Raymond Megie, who is handling the foreclosure sale, advised cutting the price to $5,000.

Megie still couldn't sell it. ``There's oversupply,'' he said. The home sold in 2005 for $110,000.  Click here for more...

> Back to the top of the page

Goldonomic, Florida, USA - +1 (772)-905-2491