1 . Analysis of Today’s Market
2 . Update On Gold
3. Real-estate Prices In South Florida
four. 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 as well as the real estate market, one must be patient to find out 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 should have a sense of humility about it so that they are not blind to the reality of the market place.
In March of 2006, our eBook How To Prosper In the Altering Real Estate Marketplace. Protect Yourself From your Bubble Now! stated that in short order the real estate market would slow down significantly and become a real drag on the economic climate. We are experiencing this slowdown currently and the economy I feel is not far from slowing down as well. History has frequently shown that a slow down in the housing market and construction market has typically led to an economic recession throughout America’s history.
Let’s look at what is happening within the following areas to see what we may gleam from them: Gold, Real Estate in South Florida, Real Estate Nationwide, Yield Curve/Economy and see what this means to you:
second . Gold
If you have read this publication and/or the eBook, you know I am a big fan of investing in gold. 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 increased? Gold is a neutral form of foreign currency, it can’t be printed by an authorities and thus it is a long term hedge against currency devaluation. James Burton, Leader 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 no one’s liability. It is thus the defense against unknown contingencies. This is a long-term inflation hedge and also a proven dollar hedge while it has great diversification properties for a central bank’s reserve asset portfolio. ”
I actually agree with Mr. Burton 100%. In my opinion we will even see a bubble in gold again and that is why I use invested in gold to profit from this potential bubble (Think real estate costs around the year 2002 – didn’t you like to have bought more real estate in those days? )
I had previously recommended that you buy gold when it was in between $580 and $600 an oz. Currently, gold is trading on around $670 an ounce up more than 10% from the levels I actually recommended. However , gold has some serious technical resistance at the $670 level and if it fails to break out by means of that level it might go down in the short-term. If it does go down again to the $620 – $640 degree, I like it at these levels as a buy. I believe that precious metal will go to $800 an oz before the end of 2007.
three or more. Real Estate in South Florida
Property in South Florida has been strike hard by this slowdown because it was one of the largest advancers throughout the housing boom. The combination of rising homes for sale on the market, the amazing amount of design occurring in the area and higher rates of interest have been three of the major factors of the slowdown.
For every home that sold in the South Florida region in 2006, an average of 14 did not sell according to the Multiple Listing Service (MLS) data. The number of homes available for sale on the market doubled to around 66, 000, as sales slowed to their lowest level in 10 years.
Even though home prices were up for the year of 2006, the standard asking price for homes in December had been down about 13 percent when compared with a year ago. From 2001 to 2005, the price of a single-family home in Miami-Dade increased 120 percent in order to $351, 200. This is also comparable to what happened in Broward County. The thing 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 costs far outpaced incomes of potential buyers of these homes.
Another factor that will helped drive the South Lakewood ranch boom in prices was high growth in population in Fl. From 2002 to 2005, greater than a million new residents moved to Fl and Florida also added more jobs than any other state. However , the three largest moving companies reported that 2006 was the first time in years that they had moved a lot more people out of the state of California than into it. Also, school enrollment is declining which could be another sign that middle-class families are leaving.
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By far though, the area associated with South Florida real estate that will be strike hardest is and will continue to be the particular condominium market. Due to their lower prices than homes, condos make financial sense within the South Florida area. However , the particular supply of available condos has tripled over the past year and it will get worse just before it gets better. More than eleven, 500 new condos are expected this season and 15, 000 next year with all the majority of them being built in Miami.
As a result of the oversupply, asking costs for condos are down 12% in 2006 in Miami in order to $532, 000. And incentives are substituting for price cuts. These types of incentives include paying all closing costs to free upgrades and more.
The last point to think about affecting South Florida real estate is the escalating expenses of property insurance and property taxes. These increasing costs are putting more downward pressure upon real estate prices.
My strong perception is that we are only starting to see the slowdown of the South Florida housing market and that prices will continue to drop. Due to the fact that many real estate investors are usually pulling out, where are the next influx of buyers going to come from at these current prices? Unless a serious influx of new, high paying job opportunities enter the South Florida area, property prices, just like any asset that falls out of favor after a large runup only have one way to go… lower.