David Stockman? Yes the former Director of the Federal Government’s Office of Management & Budget lays out the case for economic austerity that will eventually have to come to the US. Makers, Takers are the players and wealth re-distribution is recognized as a political tool to protect the status quo by both political parties. But what will happen when a third-party [not political per se] enters the equation and disrupts the current state? And, how will a disruption affect the fine homes market sector of housing?
Take 45 minutes or so and listen to the interview by Chris Martenson of David Stockton. riveting? No. Captivating, not really. Informative, Absolutely. Interview
As the monetary supply begins to tighten and inflation grows, the simple fact is that the fine homes buyer pool will begin to shrink. As the pool shrinks so too will the number of $350,000 and higher homes going under contract for sale. This will certainly lead to another round of deep equity reductions for homeowners. No matter what school of economic policy you subscribe to, the Law of Supply and Demand is really the law of Human Nature. If one can get the same thing or a reasonable substitute, for less one probably will go for the lesser in price. The better home will stay on the market until it is either priced remarkably or the competition is reduced. As supply moves up price will move down. I expect to see this by the end of 2012, possibly as late as Q1, 2013.
For Sellers, if you are thinking about right sizing or liquidating real estate holdings and moving to a mid-term lease for housing, now is the time. There are a lot of buyers who not only qualify but who are ready to buy. We have hit a bottom in the Tucson housing market as evidenced by the graph in the last article posted.
For Buyers, now is the time to lock in what your housing payment will be for the next 10 years. DO NOT expect to buy a home and turn it in a few years or some ridiculous return. It won’t happen no matter what the television wiz kids tell you. Real property [land only and homes on land] appreciates slowly when it is not used as an ATM.