Category — Investments

Dr. Housing Bubble uses BLS U-6 measure of unemployment which shows 1 in 5 Californians are unemployed, or working part time while looking for full time work. Read the whole thing.

FORBES MAGAZINE article by Nouriel Roubini forecasts stag-deflation over the next five years.  The article provides the economic technical data for anyone who prefers statistical heuristics.

For readers who are concerned about midterm inflation resulting from all the money the Fed is pumping into the financial system, I would point out that historically economists have been completely unreliable in predicting inflation.  Roubini’s analysis does not take into account international monetary effects, like the value of the dollar.   I’m still concerned about the dollar’s value.  Over the next five years if the dollar decreases in value prices go up.  And for real estate owners with ARMs mortgage payments increase.

THE STABILITY IN FINANCIAL MARKETS we needed, as I have previously posted, is not happening.  One thing is certain, instability will continue.  This is true because the big mortgage losses are still ahead of us.  The Pay Option ARMs resets will be in the billions in California in 2012.  Foreclosures will hit their peak then.

One thing that will not occur is something similar to the Great Depression when deflation and the money supply collapses the economy.  The opposite is runaway inflation do in part to a meltdown in the dollar.

There is a technical term for this condition.  There is the Edge of Chaos, using Chaos Theory, where the economy normally works.  Going beyond this boundary area of normal gradients of change there is Chaos.  A better more understandable term is Negative Dynamical Stability.  This occurs where corrections and efforts to bring about stability produce greater instability, in wave of increasing amplitude.  Should Negative Dynamical Stability continue the structure eventually comes apart.  Chaos results.  Then new structures evolve.

It seems now certain that the economy has entered a prolonged period of Negative Dynamical Stability.  Stand by for more negative impacts.

ASSOCIATED PRESS ONLINE ARTICLE lists five cheap ways to increase your home’s value.  Paint, maintenance inspection list, Energy Saver Appliances with rebates, and landscaping provide 2 to 500% return in value for each dollar expended.  Read the whole thing.  For a few hundred dollars you can add thousands of dollars to the value of your home.

But don’t wait until you’re ready to sell!  Enjoy cheap home upgrades yourself!

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BEARS HYBERNATE because in winter there is no food, it’s cold, miserable, and well… dreary.  I’ve always been a real estate “bear”, preferring flat or declining markets to euphoric bull markets that inevitably crash. 

I have not been blogging, but hybernating.  However, it is now “spring” in the market, and time for “bears” to get to work.

Now that the market has deliciously crashed, and continued to crash through this last month, it is time for me to “wake up”.  Ah, the winter kill!  What a “winter” it has been!  Foreclosures everywhere! Yum!  Whow!  The market bulls this time have been wiped out.  Dumb bulls.

Has the market hit the bottom yet?  Is it time to wake up?  Almost… almost there… what is the purchase price to rent ratio in Santa Clara County?  Ah, 1/1:20.  A  purchase price to capitalized rent ratio of 1:15/1 is a good time to buy. 

McMurdie’s Real Estate Rule No. 2: never buy into a declining market; buy at the low price using known minimum income/ price values, and then buy bargains.