My prediction for 2014 is short and sweet. "More Federal stimulus ahead causing mal-investment in localized asset bubbles". I will say that again but in English this time: People do dumb things with fast money and there is a lot of easy money wafting around. Hence when you get some of this easy money don't be foolish with it!
The present level of prosperity in the States is being fueled by the "wealth effect" which is fueled by large central authority stimulus propping up asset prices (mostly the stock market and to a much smaller degree the housing market as well). The wealth feels real from the perspective that people are spending money again. Nonetheless this is a game of musical chairs and you won't want to be the last one standing.
Business impulse through the printing press is like taking a drug that makes you feel great until the buzz wears off; then you have an business hang-over worse than your original problem. I suspect we are at the end of the industrial hang-over made by the last boom to bust cycle and we are just ramping up the euphoric sense of the current QE (i.e. Money printing) infinity inflationary cycle.
The following are my specific predictions about what is coming in 2014. Very few folks are bold enough to make specific predictions because the more categorical you're the less complicated it is to be wrong (and most people hate being wrong). Take these predictions with a hint of suspicion. Forward this to your friends and use it as a conversation starter. You can use the dialogue to make up your own predictions for the year. I actually want to hear your feedback.
2014 Economic Predictions for Property Investors
Property leases, wages, food, interest rates and energy prices will rise moderately in 2014.
Gold will trade between $1150 - $1450 and silver will trade $18.50 - $23.00.
I envision 30-year owner occupied mortgage rates to go up to five p.c by July and hover in the low 5s through the end of the year. Commercial loan rates will be lower than home mortgage rates because commercial banks will remain flooded by money and have no one to lend it to. Home IRs will creep up as the government withdraws stimulus from that part of the market in an effort to moderate housing price expansion.
Wall Street funds that purchased big portfolios of repossessed houses will start to liquidate their single family holdings as a result of enlarging adjustable rate mortgages. (Many The Street investment funds bought homes with short term adjustable rate loans and those loans are either coming due or are having a look at the probability of rising rates.) These Wall St funds never meant to be permanent owners (and they aren't very good at it). With home prices up this is a great time for these funds to start cleaning up their portfolios by liquidating their most irksome and most price inflated properties. The releasing of this inventory will put a downward price pressure in those markets who had the highest rates of appreciation from the trough. I might be particularly wary about buying into Vegas, Phoenix, San Francisco Bay and Southern California and if I already had a sizable profit tied to a property in one of those markets I would consider exchanging out of it.
I remain mad about the Dallas-Fort Worth metro. I do have a personal bias for telling you about that market as we are building and selling rental homes in Dallas and Fort Worth, but there are a lot of other really smart people who are very bullish on Texas. Visit our website for a great video by the North Texas Industrial Commission why the DFW economy is at the beginning of a long term upwardly trending market.
I am also drawn by Charlotte, Denver, Atlanta, Miami, Tampa, Washington DC metro, Portland, and Seattle but not quite so much as I like Texas. I envision all the major cities and tiny oil cities in Texas will have 6-10% housing price and hire increases with lower rates of vacancy (6.5% vacancy or less).
Bitcoin will get more media interest, but its pricing will become far more uncertain such that only the black market economy will actually. Accept it for payment. Executives around the planet will find some way to tax bitcoin.
Stock costs will become very volatile in 2014. Watch for heart wrenching price swings of 10-15% up and down in a given month. Stock traders will make record profits in 2014. Stock backers will end the year sideways or down.
The unemployment rate is far worse than the printed numbers because many individuals who've expired off of unemployment benefits and have stopped looking for work, or they have moved onto the rolls of Fed. disability. States pay for unemployment benefits but the Fed pays for disability so cash strapped states are moving folks off unemployment benefits and onto Federal incapacity benefits as a method of balancing their budgets. Those on disability are not counted as unemployed.
Expect to see a jobless industrial recovery. The space between the affluent and the poor will broaden as the well-off make money by owning assets which are rising in price while the poor earn cash selling their time but there will be less and less jobs for amateur employees as a result of increased environmental protection legislation and higher minimum wage laws. "The best way to help the poor is to not be one of them. " â€"Laing Hancock
2014 will be a prosperous year for most. Take care not to sucked into speculative investments because fiat currency will be causing mal-investment everywhere. If you happen to be looking for a fast read on how fiat currency manipulation leads to bad decision making I highly recommend reading "The Clipper Ship Methodology" and "Whatever Occurred to Penny Candy" by Richard Maybury.
A guru of mine once related, "There is no such thing as a bad or good economy" You can only ever be talented or amateur in your interaction with the economy.
[Editor's Note: Be certain to see our new Better Business Bureau Review].
The present level of prosperity in the States is being fueled by the "wealth effect" which is fueled by large central authority stimulus propping up asset prices (mostly the stock market and to a much smaller degree the housing market as well). The wealth feels real from the perspective that people are spending money again. Nonetheless this is a game of musical chairs and you won't want to be the last one standing.
Business impulse through the printing press is like taking a drug that makes you feel great until the buzz wears off; then you have an business hang-over worse than your original problem. I suspect we are at the end of the industrial hang-over made by the last boom to bust cycle and we are just ramping up the euphoric sense of the current QE (i.e. Money printing) infinity inflationary cycle.
The following are my specific predictions about what is coming in 2014. Very few folks are bold enough to make specific predictions because the more categorical you're the less complicated it is to be wrong (and most people hate being wrong). Take these predictions with a hint of suspicion. Forward this to your friends and use it as a conversation starter. You can use the dialogue to make up your own predictions for the year. I actually want to hear your feedback.
2014 Economic Predictions for Property Investors
Property leases, wages, food, interest rates and energy prices will rise moderately in 2014.
Gold will trade between $1150 - $1450 and silver will trade $18.50 - $23.00.
I envision 30-year owner occupied mortgage rates to go up to five p.c by July and hover in the low 5s through the end of the year. Commercial loan rates will be lower than home mortgage rates because commercial banks will remain flooded by money and have no one to lend it to. Home IRs will creep up as the government withdraws stimulus from that part of the market in an effort to moderate housing price expansion.
Wall Street funds that purchased big portfolios of repossessed houses will start to liquidate their single family holdings as a result of enlarging adjustable rate mortgages. (Many The Street investment funds bought homes with short term adjustable rate loans and those loans are either coming due or are having a look at the probability of rising rates.) These Wall St funds never meant to be permanent owners (and they aren't very good at it). With home prices up this is a great time for these funds to start cleaning up their portfolios by liquidating their most irksome and most price inflated properties. The releasing of this inventory will put a downward price pressure in those markets who had the highest rates of appreciation from the trough. I might be particularly wary about buying into Vegas, Phoenix, San Francisco Bay and Southern California and if I already had a sizable profit tied to a property in one of those markets I would consider exchanging out of it.
I remain mad about the Dallas-Fort Worth metro. I do have a personal bias for telling you about that market as we are building and selling rental homes in Dallas and Fort Worth, but there are a lot of other really smart people who are very bullish on Texas. Visit our website for a great video by the North Texas Industrial Commission why the DFW economy is at the beginning of a long term upwardly trending market.
I am also drawn by Charlotte, Denver, Atlanta, Miami, Tampa, Washington DC metro, Portland, and Seattle but not quite so much as I like Texas. I envision all the major cities and tiny oil cities in Texas will have 6-10% housing price and hire increases with lower rates of vacancy (6.5% vacancy or less).
Bitcoin will get more media interest, but its pricing will become far more uncertain such that only the black market economy will actually. Accept it for payment. Executives around the planet will find some way to tax bitcoin.
Stock costs will become very volatile in 2014. Watch for heart wrenching price swings of 10-15% up and down in a given month. Stock traders will make record profits in 2014. Stock backers will end the year sideways or down.
The unemployment rate is far worse than the printed numbers because many individuals who've expired off of unemployment benefits and have stopped looking for work, or they have moved onto the rolls of Fed. disability. States pay for unemployment benefits but the Fed pays for disability so cash strapped states are moving folks off unemployment benefits and onto Federal incapacity benefits as a method of balancing their budgets. Those on disability are not counted as unemployed.
Expect to see a jobless industrial recovery. The space between the affluent and the poor will broaden as the well-off make money by owning assets which are rising in price while the poor earn cash selling their time but there will be less and less jobs for amateur employees as a result of increased environmental protection legislation and higher minimum wage laws. "The best way to help the poor is to not be one of them. " â€"Laing Hancock
2014 will be a prosperous year for most. Take care not to sucked into speculative investments because fiat currency will be causing mal-investment everywhere. If you happen to be looking for a fast read on how fiat currency manipulation leads to bad decision making I highly recommend reading "The Clipper Ship Methodology" and "Whatever Occurred to Penny Candy" by Richard Maybury.
A guru of mine once related, "There is no such thing as a bad or good economy" You can only ever be talented or amateur in your interaction with the economy.
[Editor's Note: Be certain to see our new Better Business Bureau Review].
About the Author:
Marco Santarelli is an investor, writer and founder of Norada Real-estate Investments â€" countrywide property investment firm providing turnkey investment property in expansion markets around the US. For more articles like 2014 Economic Forecasts For Investors In Property, feel free to visit our Real-estate Investing Blog where it was originally published.
No comments:
Post a Comment