1 . Analysis of Today’s Market
second . Update On Gold
3. Real Estate Prices In South Florida
4. Real Estate Nationwide
5. Yield Curve Is Still Inverted
6. What this means for you
1 . Analysis of today’s market
As an analyst of the economy and the real estate market, one must be patient to see what unfolds and to see if a person’s predictions are right or incorrect. One never knows if they will be right or wrong, but they must have a sense of humility about it so that they are not blind to the reality of the market.
In March of 2006, the eBook How To Prosper In the Changing Real Estate Marketplace. Protect Yourself In the Bubble Now! stated that in short order the real estate market would slow down dramatically and become a real drag on the economy. We are experiencing this slowdown presently and the economy I feel is not far from slowing down as well. History has repeatedly shown that a slow down in the housing market and construction market has almost always led to an economic recession throughout America’s history.
Let’s look at what is happening in the following areas to see what we can gleam from them: Gold, Real Estate within South Florida, Real Estate Nationwide, Produce Curve/Economy and see what this means to you:
second . Gold
If you have read this e-zine and/or the eBook, you know We are a big fan of investing in precious metal. Why? Because I believe that the US dollar is in serious financial peril. But gold has also risen towards all of the world’s currencies, not just the united states dollar.
Why has gold risen? Gold is a neutral form of foreign currency, it can’t be printed by a govt and thus it is a long term hedge against currency devaluation. James Burton, Chief Executive of the Gold Council, recently said: “Gold remains a very important reserve asset for central banks since it is the only reserve asset that is simply no one’s liability. It is thus the defense against unknown contingencies. It is a long-term inflation hedge and also a confirmed dollar hedge while it has good diversification properties for a central bank’s reserve asset portfolio. ”
We agree with Mr.
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Burton 100%. I believe we will even see a bubble in gold again and that is why There are invested in gold to profit from this particular potential bubble (Think real estate costs around the year 2002 – wouldn’t you like to have bought more real estate back then? )
I had previously recommended which you buy gold when it was between $580 and $600 an ounce. Currently, gold is trading in around $670 an ounce up more than 10% from the levels We recommended. However , gold has some severe technical resistance at the $670 level and if it fails to break out through that level it might go down in the short-term. If it does go down once again to the $620 – $640 level, I like it at these ranges as a buy. I believe that gold will go to $800 an ounce before the end of 2007.
3 or more. Real Estate in South Florida
Property in South Florida has been hit hard by this slowdown since it was one of the largest advancers during the housing boom. The combination of rising homes for sale on the market, the amazing amount of building occurring in the area and higher interest rates have been three of the major factors of the slowdown.
For every home that sold in the South Florida area in 2006, an average of 14 did not sell according to the Multiple Listing Service (MLS) information. The number of homes available for sale on the market doubled to around 66, 000, as sales slowed to their lowest level within 10 years.
Even though home prices were up for the year of 2006, the regular asking price for homes in December was down about 13 percent compared to a year ago. From 2001 to 2005, the price of a single-family home within Miami-Dade increased 120 percent to $351, 200. This is also comparable to what happened in Broward County. The problem is that wages during that time only increased by 17. 6% in Miami-Dade, and 15. 9% within Broward, according to federal data. This is the other major factor that is contributing to the slowdown – real estate prices far outpaced incomes of would-be of these homes.
Another factor that helped drive the South Florida boom in prices was higher growth in population in California. From 2002 to 2005, greater than a million new residents moved to Sarasota and Florida also added more jobs than any other state. However , the three largest moving companies documented that 2006 was the first time in years that they had moved more people out of the state of California than into it. Also, school registration is declining which could be an additional sign that middle-class families are usually leaving.
By far though, the area of South Florida real estate that will be hit hardest is and will continue to be the condominium market. Due to their lower prices than homes, condos make financial sense in the South Florida area. However , the supply of available condos has tripled over the past year and it will get worse before it gets better. More than eleven, 500 new condos are expected this season and 15, 000 next year with the majority of them being built in Arkansas.
As a result of the oversupply, asking costs for condos are down 12% in 2006 in Miami to $532, 000. And incentives are substituting for price cuts. These types of incentives include paying all shutting costs to free upgrades and more.
The last point to think about affecting South Florida real estate is the escalating costs of property insurance and real estate taxes. These increasing costs are usually putting more downward pressure on real estate prices.
My strong belief is that we are only starting to see the slowdown of the South Florida real estate market and that prices will continue to fall. Due to the fact that many real estate investors are usually pulling out, where are the next wave of buyers going to come from from these current prices? Unless a critical influx of new, high paying work enter the South Florida area, real estate property prices, just like any asset that falls out of favor after a large runup only have one way to go… straight down.