The CRE bloodbath has to spread to RRE, it’s just a matter of time. And by the way, the shortage of residential housing propaganda is a lie, there are 12M empty homes. Once a small fraction of those come to market which they will in this high interest rate and cash crunch environment, you can see a worse than 2008 RE market. In terms of monthly payments to after tax income ratio, RE now is more expensive than peak of last RE bubble. This house of cards will fall. Office CRE was considered as A grade gold plated investment just 3 years ago and now they are worse than junk bond. Smart investors like me and Warren Buffet are sitting on the sidelines collecting 5% on cash and waiting for the bloodbath; stupid ones are in denial and trying to catch the falling knife but they cannot hold the dam for too long which will soon break. Many RE fanatics who bought in 2022 and thought they won a lottery have seen their home value fall by 20% and are now stuck holding the bag. Those who are buying now will feel the same way in a year. There is no dearth of stupidity.
All assets will be forced to come down else USD will lose. Fed will pick the former option any day. Unfortunately Fed has to fight the stupid generation too, who doesn’t know abc of investing.
Globalization is unwinding and USD is losing clout slowly as well as the west. Both trends are highly inflationary. Fed will be forced to keep rates high to keep inflation down for a while else USD will lose even faster. At 5+% rate which will be the new normal for many years I do not see how stocks or RE can be saved from cratering. Only question is by how much.
20%? I thought you predicted 50%. Meanwhile RE prices are going up again. In an inflationary environment prices go up.
In the 70s inflation hurt stocks but helped RE.
Comparing yourself to Warren Buffett only hurts your credibility.
Holding cash is only a temporary strategy. Especially if you think the dollar is cratering.
Meanwhile Tahoe RE is booming. Brisk sales low inventory and lots of cash buyers. A 21 day close usually means a cash deal
With inflation cash is eroding, stocks are shaky. At least RE is tangible asset. The housing shortage is real. Every listing gets dozens of calls. And the cost to build is rising with inflation.
It’s costs so much to build that in many locations even if land was free it would be impossible to build for less than current market sales price per sf. Sam Zell’s motto… try to buy below replacement cost
People are definitely spending less on home projects. Prices of materials are dropping, and they are offering pretty big sales. People had to eventually cutback on spending somewhere with inflation eating into budgets, and consumers spending down their savings.
After long time (almost 1 year) i am getting cold calls about selling home in California(Folsom, Dublin, Mountain House).
Not sure if this is any indicator of market picking up in East Bay and California. Anyone seeing this trend?
