My prediction for 2014 is fast. "More Federal stimulus ahead causing mal-investment in local asset bubbles". I'll say that again but in English this time: People do foolish things with easy money and there's a lot of quick cash floating around. So , when you get some of this quick money don't be dumb with it!
The existing level of prosperity in the States is being powered by the "wealth effect" which is fueled by large government stimulus holding up asset prices (often the stock market and to a much smaller degree the housing market as well). The prosperity feels real from the viewpoint that people are spending money again. Nonetheless this is a game of musical chairs and you won't wish to be the last one standing.
Commercial impulse through the printing press is like taking a drug that causes you to feel great until the buzz wears off; then you have 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 sense of the existing QE (i.e. Cash printing) infinity inflationary cycle.
The following are my categorical predictions about what is coming in 2014. Very few folks are bold enough to make explicit predictions because the more certain you are the simpler it is to be wrong (and most folks 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 really want to hear your feedback.
2014 Industrial Predictions for Real Estate Investors
Property rents, wages, food, rates and energy prices will rise moderately 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 5 % by July and hover in the low 5s through the close of the year. Commercial loan rates will be lower than home mortgage rates because commercial banks will remain flooded by money and have no one to lend it to. Home interest rates will creep up as the government withdraws impulse from that part of the market in an attempt to moderate housing price growth.
Wall Street funds that bought sizeable portfolios of repossessed houses will begin to liquidate their single family holdings as a result of increasing adjustable rate mortgages. (Many The Street investment funds acquired homes with short term variable rate loans and those loans are either coming due or are looking at the chance of rising interest rates.) These The Street funds never planned to be permanent owners (and they aren't very good 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'd be very cautious about buying into Las Vegas, Phoenix, San Francisco Bay and Southern California and if I already had a sizable profit tied to a property in one of those markets I'd consider exchanging out of it.
I remain a huge fan of 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 many other extremely smart folks who are really bullish on Texas. Visit our website for a great video by the North Texas Business 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 as much as I like Texas. I predict all of the major towns and little oil towns in Texas will have 6-10% housing price and rent increases along 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 actually. Accept it for payment. Executives around the planet will find some way to tax bitcoin.
Stock costs will become highly unsteady in 2014. Watch for heart wrenching price swings of 10-15% up and down in a given month. Stock traders will make record profits in 2014. Stock speculators will end the year sideways or down.
The rate of unemployment is far worse than the published numbers because many folks who've expired off unemployment benefits and have stopped trying to find work, or they have moved onto the rolls of Federal disability. States pay for unemployment benefits but the Fed pays for disability so cash strapped states are moving people off unemployment benefits and onto Fed. incapacity benefits as a method of balancing their budgets. Those on incapacity aren't counted as jobless.
Expect to see a unwaged economic recovery. The gap between the wealthy and the poor will widen as the affluent earn cash by owning assets which are inflating in price while the poor earn money selling their time but there will be fewer and fewer jobs for unskilled employees because 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 prosperous year for many. Watch out not to sucked into hopeful 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 seriously recommend reading "The Clipper Ship Methodology" and "Whatever Happened to Penny Candy" by Richard Maybury.
A guru of mine once asserted, "There is no such thing as a bad or good economy" You can only ever be talented or unskilled in your interplay with the economy.
[Editor's Note: Be certain to see our new Better Business Bureau Review].
The existing level of prosperity in the States is being powered by the "wealth effect" which is fueled by large government stimulus holding up asset prices (often the stock market and to a much smaller degree the housing market as well). The prosperity feels real from the viewpoint that people are spending money again. Nonetheless this is a game of musical chairs and you won't wish to be the last one standing.
Commercial impulse through the printing press is like taking a drug that causes you to feel great until the buzz wears off; then you have 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 sense of the existing QE (i.e. Cash printing) infinity inflationary cycle.
The following are my categorical predictions about what is coming in 2014. Very few folks are bold enough to make explicit predictions because the more certain you are the simpler it is to be wrong (and most folks 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 really want to hear your feedback.
2014 Industrial Predictions for Real Estate Investors
Property rents, wages, food, rates and energy prices will rise moderately 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 5 % by July and hover in the low 5s through the close of the year. Commercial loan rates will be lower than home mortgage rates because commercial banks will remain flooded by money and have no one to lend it to. Home interest rates will creep up as the government withdraws impulse from that part of the market in an attempt to moderate housing price growth.
Wall Street funds that bought sizeable portfolios of repossessed houses will begin to liquidate their single family holdings as a result of increasing adjustable rate mortgages. (Many The Street investment funds acquired homes with short term variable rate loans and those loans are either coming due or are looking at the chance of rising interest rates.) These The Street funds never planned to be permanent owners (and they aren't very good 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'd be very cautious about buying into Las Vegas, Phoenix, San Francisco Bay and Southern California and if I already had a sizable profit tied to a property in one of those markets I'd consider exchanging out of it.
I remain a huge fan of 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 many other extremely smart folks who are really bullish on Texas. Visit our website for a great video by the North Texas Business 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 as much as I like Texas. I predict all of the major towns and little oil towns in Texas will have 6-10% housing price and rent increases along 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 actually. Accept it for payment. Executives around the planet will find some way to tax bitcoin.
Stock costs will become highly unsteady in 2014. Watch for heart wrenching price swings of 10-15% up and down in a given month. Stock traders will make record profits in 2014. Stock speculators will end the year sideways or down.
The rate of unemployment is far worse than the published numbers because many folks who've expired off unemployment benefits and have stopped trying to find work, or they have moved onto the rolls of Federal disability. States pay for unemployment benefits but the Fed pays for disability so cash strapped states are moving people off unemployment benefits and onto Fed. incapacity benefits as a method of balancing their budgets. Those on incapacity aren't counted as jobless.
Expect to see a unwaged economic recovery. The gap between the wealthy and the poor will widen as the affluent earn cash by owning assets which are inflating in price while the poor earn money selling their time but there will be fewer and fewer jobs for unskilled employees because 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 prosperous year for many. Watch out not to sucked into hopeful 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 seriously recommend reading "The Clipper Ship Methodology" and "Whatever Happened to Penny Candy" by Richard Maybury.
A guru of mine once asserted, "There is no such thing as a bad or good economy" You can only ever be talented or unskilled in your interplay with the economy.
[Editor's Note: Be certain 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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