1 . Analysis of Today’s Market
second . Update On Gold
3. Real estate property Prices In South Florida
four. Real Estate Nationwide
5. Yield Contour Is Still Inverted
6. What this means to you
1 . Analysis of today’s marketplace
As an analyst of the economy and the real estate market, one must be patient to see what unfolds and to see if their predictions are right or incorrect. One never knows if they will be right or wrong, but they must have a sense of humility about it so that they aren’t blind to the reality of the marketplace.
In March of 2006, my eBook How To Prosper In the Transforming Real Estate Marketplace. Protect Yourself In the Bubble Now! stated that in short order the real estate market would slow down dramatically and become a real drag on the economy. We are experiencing this slowdown presently and the economy I feel is not faraway from slowing down as well. History has frequently shown that a slow down in the real estate market and construction market has almost always led to an economic recession throughout Many history.
Let’s look at what is happening within the following areas to see what we may gleam from them: Gold, Real Estate within South Florida, Real Estate Nationwide, Produce Curve/Economy and see what this means to you:
2 . Gold
If you have read this e-newsletter and/or the eBook, you know I am a big fan of investing in gold. Why? Because I believe that the ALL OF US dollar is in serious financial danger. But gold has also risen against 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 stated: “Gold remains a very important reserve resource for central banks since it is the only reserve asset that is simply no one’s liability. It is thus the defense against unknown contingencies. This is a long-term inflation hedge and also a confirmed dollar hedge while it has great diversification properties for a central bank’s reserve asset portfolio. ”
We agree with Mr. Burton 100%. I believe we will even see a bubble within gold again and that is why You will find invested in gold to profit from this particular potential bubble (Think real estate prices 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 among $580 and $600 an ounce. Currently, gold is trading at around $670 an ounce up more than 10% from the levels We recommended. However , gold has some severe technical resistance at the $670 level and if it fails to break out through that level it might go down within 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 gold will go to $800 an oz before the end of 2007.
3 or more. Real Estate in South Florida
Property in South Florida has been strike hard by this slowdown since 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 elements of the slowdown.
For every home that will sold in the South Florida area in 2006, an average of 14 failed to 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 product sales slowed to their lowest level in 10 years.
Even though home prices were up for the year of 2006, the regular asking price for homes in December was down about 13 percent in comparison to a year ago. From 2001 to 2006, the price of a single-family home in Miami-Dade increased 120 percent in order to $351, 200. This is also just like what happened in Broward County. The problem is that wages during that time only increased by 17. 6% within Miami-Dade, and 15. 9% within Broward, according to federal data. This is actually the other major factor that is adding to the slowdown – real estate costs far outpaced incomes of audience of these homes.
Another factor that will helped drive the South Lakewood ranch boom in prices was high growth in population in Sarasota. From 2002 to 2005, greater than a million new residents moved to Sarasota and Florida also added more jobs than any other state. However , the three largest moving companies documented that 2006 was the first time within years that they had moved a lot more people out of the state of Sarasota than into it. Also, school registration is declining which could be one more sign that middle-class families are leaving.
By far though, the area of 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 prior to it gets better. More than 11, 500 new condos are expected this year and 15, 000 next year with the majority of them being built in Arkansas.
As a result of the oversupply, asking costs for condos are down 12% in 2006 in Miami in order to $532, 000.
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And incentives are substituting for price cuts. These incentives include paying all shutting costs to free upgrades and more.
The last point to think about affecting Southern Florida real estate is the escalating costs of property insurance and house taxes. These increasing costs are putting more downward pressure on real estate prices.
My strong belief is that we are only starting to see the slowdown of the South Florida real estate market and that prices will continue to drop. Due to the fact that many real estate investors are pulling out, where are the next wave of buyers going to come from on these current prices? Unless a serious influx of new, high paying job opportunities enter the South Florida area, real estate property prices, just like any asset that falls out of favor after a big runup only have one way to go… lower.