My prophecy for 2014 is short and sweet. "More Federal impulse ahead causing mal-investment in localized asset bubbles". I will say that again but in English this time: People do foolish things with fast money and there is a lot of quick cash bobbing around. So , when you get some of this quick money do not be stupid with it!
The current level of wealth in the USA is being fueled by the "wealth effect" which is powered by large government stimulus holding 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 folks are spending money again. Nonetheless this is a game of musical chairs and you won't need to be the last one standing.
Business stimulus through the printing press is like trying a drug that makes you feel great till the buzz wears off; then you have got an economic hang-over worse than your original problem. I believe we are at the end of the industrial hang-over created by the last bust and boom cycle and we are just ramping up the enraptured feeling of the current QE (i.e. Cash printing) infinity inflationary cycle.
Here are my specific predictions about what is coming in 2014. Very few people are bold enough to make explicit forecasts because the more categorical you're the simpler it is to be wrong (and most people hate being wrong). Take these forecasts with a pinch of salt. Forward this to your mates and use it as a conversation starter. You can use the dialogue to make up your own forecasts for the year. I want to hear your feedback.
2014 Business Forecasts for Real Estate Investors
Real estate rents, wages, food, interest rates and energy costs will rise tolerably 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 fives through the end of the year. Commercial loan rates will be lower than home mortgage rates because commercial banks will remain deluged with money and have no one to loan it to. Home rates will creep up as the govt withdraws stimulus from that part of the market in an attempt to moderate housing price expansion.
Wall Street funds that bought large portfolios of repossessed houses will start to liquidate their single family holdings because of increasing variable rate mortgages. (Many The Street investment funds purchased homes with short term adjustable rate loans and those loans are either coming due or are taking a look at the chance of rising rates.) These Wall St funds never intended to be permanent landlords (and they aren't very good at it). With home costs up this is a good time for these funds to start cleaning up their portfolios by liquidating their most troublesome and most price inflated properties. The release 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 cautious about creating 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 might consider exchanging out of it.
I remain mad about the Dallas-Fort Worth metro. I do have an individual bias for telling you about that market because we are building and selling rental homes in Dallas and Fort Worth, but there are some other really smart individuals that are really bullish on Texas. Visit our website for a great video by the North Texas Industrial Commission why the DFW economy is at the very start of a long-term upwardly trending market.
I am also intrigued by Charlotte, Denver, Atlanta, Miami, Tampa, Washington DC metro, Portland, and Seattle but not nearly so much as I like Texas. I foretell all of 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 even more uncertain such that only the black market economy will actually. Accept it for payment. Executives around the planet will find a way to tax bitcoin.
Stock prices will become highly unsteady in 2014. Watch for heart wrenching price swings of 10-15% up and down in a stated month. Stock traders will make record profits in 2014. Stock backers will end the year sideways or down.
The jobless rate is far worse than the published numbers because many folks who've expired off of unemployment benefits and have stopped attempting to find work, or they have moved onto the rolls of Fed. incapacity. States pay for unemployment benefits but the Federal Agency pays for incapacity so money strapped states are moving folks off unemployment benefits and onto Federal disability benefits as a method of balancing their budgets. Those on disability are not counted as unemployed.
Expect to see a unemployed industrial recovery. The gap between the affluent and the poor will widen as the wealthy make money by owning assets which are inflating in price while the poor earn cash 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 simplest 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 speculative investments because fiat currency will be causing mal-investment everywhere. When you are looking for a fast read on how fiat currency manipulation leads to bad decision making I highly recommend reading "The Clipper Ship Method" and "Whatever Occurred to Penny Candy" by Richard Maybury.
A guru of mine once related, "There is not such a thing as a bad or good economy" You can only ever be skilled or inexperienced in your interplay with the economy.
[Editor's Note: Be sure to see our new Better Business Bureau Review].
The current level of wealth in the USA is being fueled by the "wealth effect" which is powered by large government stimulus holding 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 folks are spending money again. Nonetheless this is a game of musical chairs and you won't need to be the last one standing.
Business stimulus through the printing press is like trying a drug that makes you feel great till the buzz wears off; then you have got an economic hang-over worse than your original problem. I believe we are at the end of the industrial hang-over created by the last bust and boom cycle and we are just ramping up the enraptured feeling of the current QE (i.e. Cash printing) infinity inflationary cycle.
Here are my specific predictions about what is coming in 2014. Very few people are bold enough to make explicit forecasts because the more categorical you're the simpler it is to be wrong (and most people hate being wrong). Take these forecasts with a pinch of salt. Forward this to your mates and use it as a conversation starter. You can use the dialogue to make up your own forecasts for the year. I want to hear your feedback.
2014 Business Forecasts for Real Estate Investors
Real estate rents, wages, food, interest rates and energy costs will rise tolerably 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 fives through the end of the year. Commercial loan rates will be lower than home mortgage rates because commercial banks will remain deluged with money and have no one to loan it to. Home rates will creep up as the govt withdraws stimulus from that part of the market in an attempt to moderate housing price expansion.
Wall Street funds that bought large portfolios of repossessed houses will start to liquidate their single family holdings because of increasing variable rate mortgages. (Many The Street investment funds purchased homes with short term adjustable rate loans and those loans are either coming due or are taking a look at the chance of rising rates.) These Wall St funds never intended to be permanent landlords (and they aren't very good at it). With home costs up this is a good time for these funds to start cleaning up their portfolios by liquidating their most troublesome and most price inflated properties. The release 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 cautious about creating 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 might consider exchanging out of it.
I remain mad about the Dallas-Fort Worth metro. I do have an individual bias for telling you about that market because we are building and selling rental homes in Dallas and Fort Worth, but there are some other really smart individuals that are really bullish on Texas. Visit our website for a great video by the North Texas Industrial Commission why the DFW economy is at the very start of a long-term upwardly trending market.
I am also intrigued by Charlotte, Denver, Atlanta, Miami, Tampa, Washington DC metro, Portland, and Seattle but not nearly so much as I like Texas. I foretell all of 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 even more uncertain such that only the black market economy will actually. Accept it for payment. Executives around the planet will find a way to tax bitcoin.
Stock prices will become highly unsteady in 2014. Watch for heart wrenching price swings of 10-15% up and down in a stated month. Stock traders will make record profits in 2014. Stock backers will end the year sideways or down.
The jobless rate is far worse than the published numbers because many folks who've expired off of unemployment benefits and have stopped attempting to find work, or they have moved onto the rolls of Fed. incapacity. States pay for unemployment benefits but the Federal Agency pays for incapacity so money strapped states are moving folks off unemployment benefits and onto Federal disability benefits as a method of balancing their budgets. Those on disability are not counted as unemployed.
Expect to see a unemployed industrial recovery. The gap between the affluent and the poor will widen as the wealthy make money by owning assets which are inflating in price while the poor earn cash 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 simplest 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 speculative investments because fiat currency will be causing mal-investment everywhere. When you are looking for a fast read on how fiat currency manipulation leads to bad decision making I highly recommend reading "The Clipper Ship Method" and "Whatever Occurred to Penny Candy" by Richard Maybury.
A guru of mine once related, "There is not such a thing as a bad or good economy" You can only ever be skilled or inexperienced 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, author and founding figure behind Norada Property Investments â€" a national real-estate investment firm providing turnkey investment property in growth markets around the U.S.. For more articles like 2014 Commercial Predictions For Real Estate Investors, please feel free to visit our Property Investing Blog where it was initially published.
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