My prediction for 2014 is quick. "More Federal stimulus ahead causing mal-investment in local asset bubbles". I will say that again but in English this time: Folk do foolish things with easy cash and there is a lot of easy cash wafting around. Therefore when you get some of this quick money do not be dumb with it!
The existing level of prosperity in the US is being fueled by the "wealth effect" which is fueled by massive central authority stimulus supporting asset prices (mostly the stock market and to a much lesser degree the home market as well). The wealth feels real from the perspective that folks are spending money again. However , this is a game of musical chairs and you won't want to be the last one standing.
Commercial impulse through the printing press is like using a drug that makes you feel great until the buzz wears off; then you have an industrial hang-over worse than your original problem. I suspect we are at the end of the commercial hang-over made by the last bust and boom cycle and we are just ramping up the euphoric feeling of the current QE (i.e. Cash printing) infinity inflationary cycle.
The following are my explicit forecasts about what's coming in 2014. Only a few people are bold enough to make explicit forecasts because the more specific you're the simpler it is to be wrong (and the majority hate being wrong). Take these forecasts with a hint of suspicion. Forward this to your chums and use it as a conversation starter. You need to use the dialogue to make up your own forecasts for the year. I want to hear your feedback.
2014 Business Predictions for Real Estate Investors
Real estate leases, salary, food, IRs and energy prices will rise tolerably in 2014.
Gold will trade between $1150 - $1450 and silver will trade $18.50 - $23.00.
I foretell 30-year owner occupied mortgage IRs to go up to 5 % by July and hover in the low fives through the end of the year. Commercial loan rates will be lower than residential mortgage rates because commercial banks will remain flooded with cash and have no one to lend it to. Home rates will creep up as the govt withdraws stimulus from that part of the market to try to moderate housing price growth.
Wall Street funds that acquired big portfolios of repossessed homes will start to liquidate their single family holdings as a result of increasing adjustable rate mortgages. (Many The Street investment funds acquired houses with short term adjustable rate loans and those loans are either coming due or are looking at the chance of rising rates.) These Wall Street funds never intended to be permanent owners (and they aren't superb 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 would be particularly wary about taking a position in Vegas, Phoenix, San Francisco Bay and Southern California and if I already had a large profit tied to a property in one of those markets I would consider exchanging out of it.
I remain a massive fan of the Dallas-Fort Worth metro. I do have a private bias for letting you know about that market because we are building and selling rental homes in Dallas and Fort Worth, but there are many other extremely smart individuals that are really bullish on Texas. Visit our website for a great video by the North Texas Economic Commission why the DFW economy is at the very 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 nearly so much as I like Texas. I envision all the major cities and tiny oil towns in Texas will have 6-10% housing price and rent increases with lower rates of vacancy (6.5% vacancy or less).
Bitcoin will get more media attention, but its pricing will become even more volatile such that only the black market economy will truly. Accept it for payment. Governments around the globe will find some way to tax bitcoin.
Stock prices will become very unsteady in 2014. Watch for heart wrenching price swings of 10-15% up and down in a fixed 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 folks 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 Federal Agency pays for disability so cash strapped states are moving people off unemployment benefits and onto Fed. disability benefits as a method of balancing their budgets. Those on disability are not counted as unemployed.
Expect to see a jobless commercial recovery. The distance between the affluent and the poor will expand as the well-off earn money by owning assets which are rising in price while the poor make money selling their time but there will be less and fewer jobs for inexperienced 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 wealthy year for most. Take care not to sucked into hopeful investments because fiat currency will be causing mal-investment everywhere. If you are looking for a fast read on how fiat currency manipulation leads to bad decision making I seriously recommend reading "The Clipper Ship Method" and "Whatever Happened to Penny Candy" by Richard Maybury.
A guru of mine once asserted, "There is not such a thing as a bad or good economy" You can only ever be skilled or amateur in your interplay with the economy.
[Editor's Note: Be sure to see our new Better Business Bureau Review].
The existing level of prosperity in the US is being fueled by the "wealth effect" which is fueled by massive central authority stimulus supporting asset prices (mostly the stock market and to a much lesser degree the home market as well). The wealth feels real from the perspective that folks are spending money again. However , this is a game of musical chairs and you won't want to be the last one standing.
Commercial impulse through the printing press is like using a drug that makes you feel great until the buzz wears off; then you have an industrial hang-over worse than your original problem. I suspect we are at the end of the commercial hang-over made by the last bust and boom cycle and we are just ramping up the euphoric feeling of the current QE (i.e. Cash printing) infinity inflationary cycle.
The following are my explicit forecasts about what's coming in 2014. Only a few people are bold enough to make explicit forecasts because the more specific you're the simpler it is to be wrong (and the majority hate being wrong). Take these forecasts with a hint of suspicion. Forward this to your chums and use it as a conversation starter. You need to use the dialogue to make up your own forecasts for the year. I want to hear your feedback.
2014 Business Predictions for Real Estate Investors
Real estate leases, salary, food, IRs and energy prices will rise tolerably in 2014.
Gold will trade between $1150 - $1450 and silver will trade $18.50 - $23.00.
I foretell 30-year owner occupied mortgage IRs to go up to 5 % by July and hover in the low fives through the end of the year. Commercial loan rates will be lower than residential mortgage rates because commercial banks will remain flooded with cash and have no one to lend it to. Home rates will creep up as the govt withdraws stimulus from that part of the market to try to moderate housing price growth.
Wall Street funds that acquired big portfolios of repossessed homes will start to liquidate their single family holdings as a result of increasing adjustable rate mortgages. (Many The Street investment funds acquired houses with short term adjustable rate loans and those loans are either coming due or are looking at the chance of rising rates.) These Wall Street funds never intended to be permanent owners (and they aren't superb 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 would be particularly wary about taking a position in Vegas, Phoenix, San Francisco Bay and Southern California and if I already had a large profit tied to a property in one of those markets I would consider exchanging out of it.
I remain a massive fan of the Dallas-Fort Worth metro. I do have a private bias for letting you know about that market because we are building and selling rental homes in Dallas and Fort Worth, but there are many other extremely smart individuals that are really bullish on Texas. Visit our website for a great video by the North Texas Economic Commission why the DFW economy is at the very 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 nearly so much as I like Texas. I envision all the major cities and tiny oil towns in Texas will have 6-10% housing price and rent increases with lower rates of vacancy (6.5% vacancy or less).
Bitcoin will get more media attention, but its pricing will become even more volatile such that only the black market economy will truly. Accept it for payment. Governments around the globe will find some way to tax bitcoin.
Stock prices will become very unsteady in 2014. Watch for heart wrenching price swings of 10-15% up and down in a fixed 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 folks 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 Federal Agency pays for disability so cash strapped states are moving people off unemployment benefits and onto Fed. disability benefits as a method of balancing their budgets. Those on disability are not counted as unemployed.
Expect to see a jobless commercial recovery. The distance between the affluent and the poor will expand as the well-off earn money by owning assets which are rising in price while the poor make money selling their time but there will be less and fewer jobs for inexperienced 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 wealthy year for most. Take care not to sucked into hopeful investments because fiat currency will be causing mal-investment everywhere. If you are looking for a fast read on how fiat currency manipulation leads to bad decision making I seriously recommend reading "The Clipper Ship Method" and "Whatever Happened to Penny Candy" by Richard Maybury.
A guru of mine once asserted, "There is not such a thing as a bad or good economy" You can only ever be skilled or amateur in your interplay with the economy.
[Editor's Note: Be sure 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.
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