Is Real Estate Recession Proof?
Is Trucking Recession Proof
Your screaming, how can you say real estate is recession proof, don't you watch the news, don't you see what's happened to the housing market?"
Yes I see it, I saw it in 2006. It's not real estate's fault. Any person looking at what was going on could have seen it this coming. Property was getting way overpriced, in trendy places that is, with nothing to increase the value for that price increase.
Credit was being given out left and right to acquire these properties. The number of home loans being given was increasing steadily. Not just the investment properties, home loans in general were up.
Now at the same time the debt of Americans was rising (if you will remember this was frequently reported on the news)but not wages(you and I but know this part). I also remember news reports unrelated saying how Americans were increasing their average debt (If you will remember this was frequently reported on the new also), unsecured debt>). Looking at that big picture would reveal that credit was being over extended to a lot of people, many of whom at some point not be able to pay.
Mathematics: you are only going to create so much debt before you are no longer able to make payments on that debt.
The fact that people were buying these way overpriced properties should have been an even bigger warning sign to economy experts.
You would see stories on the news that said, "a house which was 200,000 in Cali a year ago, is now selling for 300,000." Same in Phoenix, Florida, etc.
Common sense tells me that if something already has a ridiculously inflated price buying it at that price expecting it to continue to rise for no real reason (Nothing to increase the real value of that thing) puts me at high risk of losing at the very least, the amount of money that property is overinflated by. (Possible a whole lot more because it's one thing if one person is doing this but if all across the country people are financing overpriced property at some point there is going to be a problem. Elementary) I mean I had no idea it was going to be this deep but anyone could have figure something was wrong.
You only take a risk like that, if you can handle the lost if it doesn't work out. You don't let greed cause you to spend your last dollar because of the possibility of making money a lot of money. I don't have money to invest like that and even I know that If you wait until prices rise to invest then you already missed your window of opportunity.
It's different if you spent your last dollar in a business venture that your hard work and effort plays a part in the success of the business succeeding. You can create value in that. (It's called sweat equity)
The state of things are sad right now, I know this, I am living it. (We got a 5% pay cut) It is these times that opportunities are available that you will never find when the economy is doing fine.
Note: In order to discover these opportunities you must see the glass half full. If you always see the glass half empty you will live out life as a victim of your circumstances. There is a choice to be made. No the level of pain and suffering that we endure as a result of unfairness or bad decisions doesn't mean that we are stripped of the power to make a choice. We still have the choice to assume a role as a victim or a survivor. We can give in, give up or get busy.
But What About The People Who Are Losing Their Homes
It's sad for the people who bought homes and didn't understand the adjustable rate or was lied to about the adjustable rate. (I didn't read all of my contract either, however, I did ask specifically was it an adjustable rate or not and I made sure that I got a house for less than the market value. I also didn't use the $200,000 I was approved for just because could. I didn't feel comfortable being responsible for that much debt so I opted for a $50,000 house.)
I lost my first house 10 years ago and didn't get bailed out. I paid the price, slept in a storage for a month at least, (I had stopped driving for 3years). Built myself back up and started over again. So we live and learn but how do you learn if you never pay for the consequences of your actions. So relax, it's not the end of the world, just stay positive and keep moving forward.
The people who were was just greedy and brought property to flip and couldn't because the turn of the market took a risk. A dumb risk, sorry. That was the potential outcome of the gamble they took. The time to get in was before the increase in values.
Like right now. While the market is in the 7,000 and real estate and interest rates are at record lows. When others run away you run toward.
Now is the time to buy a property at wholesale. Research must be done on location, projected growth of the area (not really rocket science).
I mean Money magazine has done a lot of research for you with the list they come out with every year of the
best places to live.
If you are near any of those places they list, see if the information is still relevant like large scale employers doing solid business in or coming to area that are resistant to much of the current economy situation.
Simple answer to the question is yes. Real Estate is recession proof is you see the glass half full. Think and invest with your head (common sense)and real estate will always be a viable way to create wealth. You just do the opposite of what everyone else does. (Same as with the stock market)
Do not follow the trend of others. Be ahead of the trend. Basically do the opposite of what other people are doing.
When they panic and sell smart people (with the money and credit) buy.
As a matter of fact use Bank of America as an example. They are doing exactly what an investor should do just at a much larger scale. People are looking at them like they are crazy. It's a calculated risk but it definitely is not a dumb one. Country Wide and Meryl Lynch was very strategic acquisitions and I think Bank of America will win in a huge way from it when the storm blows over. The trick though is not getting in over your head so that you can out last the storm.
UPDATE: Ok they weren't so smart with that whole Meryll Lynch CEO Bonus thing but I tell you what, my money is still there and it's going to stay there.
Look at the stock market, people are bugging out. Right now is the time to buy stocks, if you got my cd making life great in 2008, I said the DOW would drop below 10,000. Once it did, it was easily predictable that it would continue to drop further. (Never really thought it would drop to 7,000 though)
To me 10,000 is where the true value of the market should be. (That's where it was before it started going retarded rising at ridiculous rates)So is now the time to sell?NO!
Now is the time to buy, while everyone else is worried about predicting what the market will do next week and next month.
The market is below 10,000 it's like a no brainer investment as long as you not going to stare at the dow every day.
It will continue to rise and drop as people try and predict what others will do with each announcement of business failures or speculations of doom, earnings forecast, mass lay-offs,etc.
Eventually when the right combination of scenarios fall into place at the same time, (which includes some regulation and laws to close up some loopholes that are used to extort and squeeze money out of the system) confidence will settle people's emotions and smart investors will see the opportunity to buy low. Lenders will lend and companies will manufacture and people will get called back to work.
The media will start talking positively about growth and signs of recovering and people will feel better cause the media is their God. And sure enough this will have a snowball affect in the right direction. We will finally truly believe that the economy will rebound and so people will leave their money alone and we will began our true recovery phase.
When the DOW reaches 10,000 even more greedy people will slowly pour their money in and the market will continue to rise.( A certain level of greed is good. We all have that, natural drive to acquire and accumulate, when it's our main focus in live is when the problem is created.)
In 5 years or less the DOW will be breaking record highs again at a slower, stronger, more solid, cautious pace. (which is good)
Yep, Five years from now we will have a solid economy again. Fully recovering with much better cars, stronger companies, new companies with new products, using new technologies and techniques. Production will be up for the country.
What we have going on right now was a much needed correction. Too much fluff in the economy. This will force us as citizens to change the way we think and do things. Companies will streamline production and take wasteful spending out of their operations. The government will be under watchful eye for the way they do things. We will stop abusing credit (by force). We will be forced to reach outside of ourselves to make ends meet which will spawn creative solutions to problems. We will explore new ways to make money and start new businesses to addresses real needs in the communities. We will create and manufacture useful products that makes a difference in people's lives. Start new services. We will even develop new procedures for accomplishing old things.
I am telling you, this pain and suffering we are going through right now will be what we talk about 10 years from now. How it was our pivot point in which America began it journey back to a rock solid nation.
We are called the wealthiest country now but we really aren't as wealthy as we should be. Words and illusions that should have more substance and value behind it.
Ten years from now, it won't even need to be said. We will be a stronger and wealthier country and it will show in our numbers.
What Do We Do In The Meantime
In the mean time, we need to think outside the box because tough times are not near being over. The better equipped we are with education and information then the easier it will be to adapt to what happens. That's why it's so important to get learn as much as possible right now.
It's really not a joke right now. Government is not a solution to the problems of individuals. No matter what we are promised by whomever becomes president. We are responsible for positioning ourselves to endure hard times. The more we look to someone else for the answer to our freedom (Financial, emotional, mental, you name it) the more time we waste in chains.
The more likely it is that we will be forced to let government control our live. No hand out can compensate for self preservation. There is enough free information available to do something besides crying about how hard times are. We all know how hard times are. Saying it won't change our ability to deal with it. We must think outside of the box and not wait for disaster but prepare for it.
Eliminate the handicaps in our lives one by one and rack up all the weapons of survival as possible.
Anyway, those are just my thoughts, I wonder what you think? Please let give your feedback in the comment box below. If I am off target here put me on.
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