My prophecy 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 is a lot of easy cash floating around. Therefore when you get some of this quick money do not be stupid with it!
The present level of prosperity in the States is being powered by the "wealth effect" which is powered by huge govt impulse propping up asset prices (often the stock market and to a much smaller degree the home market as well). The prosperity feels real from the perspective 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 using a drug that causes you to feel great until the buzz wears off; then you have got an industrial hang-over worse than your original problem. I suspect we are at the end of the commercial hang-over made by the last bust and boom cycle and we are just ramping up the happy sense of the prevailing QE (i.e. Money printing) infinity inflationary cycle.
Here are my specific predictions about what is coming in 2014. Only a few folk are bold enough to make specific forecasts because the more specific you're the easier it is to be wrong (and the majority hate being wrong). Take these predictions with a grain of salt. Forward this to your chums and use it as a conversation starter. You need to use the dialogue to make up your own predictions for the year. I actually wish to hear your feedback.
2014 Business Forecasts for Real Estate Investors
Real estate leases, wages, food, interest rates and energy prices will rise tolerably in 2014.
Gold will trade between $1150 - $1450 and silver will trade $18.50 - $23.00.
I predict 30-year owner occupied mortgage IRs to go up to 5 percent by July and hover in the low 5s through the end 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 loan it to. Residential IRs will creep up as the government withdraws impulse from that part of the market in an attempt to moderate housing price expansion.
Wall Street funds that bought large portfolios of repossessed homes will begin to liquidate their single family holdings on account of accelerating adjustable rate mortgages. (Many The Street investment funds acquired houses with short term adjustable rate loans and those loans are either coming due or are looking at the chance of rising interest rates.) These Wall St funds never intended to be permanent owners (and they aren't superb at it). With home costs 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 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 very cautious about buying into 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 a personal 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 really smart people who are awfully bullish on Texas. Visit our website for a great video by the North Texas Industrial Commission why the DFW economy is at the start of a long term upwardly trending market.
Also I am attracted by Charlotte, Denver, Atlanta, Miami, Tampa, Washington DC metro, Portland, and Seattle but not nearly so much as I like Texas. I predict all the major cities and little oil towns in Texas will have 6-10% housing price and rent increases with lower rates of vacancy (6.5% vacancy or less).
Bitcoin will get more media attention, but its pricing will become far more volatile such that only the black market economy will truly. Accept it for payment. Executives around the globe will find how to tax bitcoin.
Stock prices will become very volatile in 2014. Watch for heart wrenching price swings of 10-15% up and down in a stated month. Investors will make record profits in 2014. Stock speculators will end the year sideways or down.
The jobless rate is far worse than the published numbers because many folks who have expired off unemployment benefits and have stopped trying to find work, or they have moved onto the rolls of Fed. incapacity. States pay for unemployment benefits but the Fed pays for disability so money strapped states are moving folk off unemployment benefits and onto Fed. disability benefits as a means of balancing their budgets. Those on incapacity aren't counted as jobless.
Expect to see a jobless economic recovery. The gap between the affluent and the poor will widen because the well-off make money by owning assets which are rising in price while the poor make money selling their time but there will be fewer and less jobs for inexperienced workers because of increased environmental protection legislation and higher minimum wage laws. "The best 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 speculative investments because fiat currency will be causing mal-investment everywhere. If you happen to be looking for a fast read on how fiat currency manipulation leads to bad decision-making I seriously recommend reading "The Clipper Ship Method" and "Whatever Happened to Penny Candy" by Richard Maybury.
A mentor of mine once related, "There is not such a thing as a good or bad economy" You can only ever be skilled or amateur in your interaction with the economy.
[Editor's Note: Be sure to see our new Better Business Bureau Review].
The present level of prosperity in the States is being powered by the "wealth effect" which is powered by huge govt impulse propping up asset prices (often the stock market and to a much smaller degree the home market as well). The prosperity feels real from the perspective 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 using a drug that causes you to feel great until the buzz wears off; then you have got an industrial hang-over worse than your original problem. I suspect we are at the end of the commercial hang-over made by the last bust and boom cycle and we are just ramping up the happy sense of the prevailing QE (i.e. Money printing) infinity inflationary cycle.
Here are my specific predictions about what is coming in 2014. Only a few folk are bold enough to make specific forecasts because the more specific you're the easier it is to be wrong (and the majority hate being wrong). Take these predictions with a grain of salt. Forward this to your chums and use it as a conversation starter. You need to use the dialogue to make up your own predictions for the year. I actually wish to hear your feedback.
2014 Business Forecasts for Real Estate Investors
Real estate leases, wages, food, interest rates and energy prices will rise tolerably in 2014.
Gold will trade between $1150 - $1450 and silver will trade $18.50 - $23.00.
I predict 30-year owner occupied mortgage IRs to go up to 5 percent by July and hover in the low 5s through the end 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 loan it to. Residential IRs will creep up as the government withdraws impulse from that part of the market in an attempt to moderate housing price expansion.
Wall Street funds that bought large portfolios of repossessed homes will begin to liquidate their single family holdings on account of accelerating adjustable rate mortgages. (Many The Street investment funds acquired houses with short term adjustable rate loans and those loans are either coming due or are looking at the chance of rising interest rates.) These Wall St funds never intended to be permanent owners (and they aren't superb at it). With home costs 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 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 very cautious about buying into 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 a personal 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 really smart people who are awfully bullish on Texas. Visit our website for a great video by the North Texas Industrial Commission why the DFW economy is at the start of a long term upwardly trending market.
Also I am attracted by Charlotte, Denver, Atlanta, Miami, Tampa, Washington DC metro, Portland, and Seattle but not nearly so much as I like Texas. I predict all the major cities and little oil towns in Texas will have 6-10% housing price and rent increases with lower rates of vacancy (6.5% vacancy or less).
Bitcoin will get more media attention, but its pricing will become far more volatile such that only the black market economy will truly. Accept it for payment. Executives around the globe will find how to tax bitcoin.
Stock prices will become very volatile in 2014. Watch for heart wrenching price swings of 10-15% up and down in a stated month. Investors will make record profits in 2014. Stock speculators will end the year sideways or down.
The jobless rate is far worse than the published numbers because many folks who have expired off unemployment benefits and have stopped trying to find work, or they have moved onto the rolls of Fed. incapacity. States pay for unemployment benefits but the Fed pays for disability so money strapped states are moving folk off unemployment benefits and onto Fed. disability benefits as a means of balancing their budgets. Those on incapacity aren't counted as jobless.
Expect to see a jobless economic recovery. The gap between the affluent and the poor will widen because the well-off make money by owning assets which are rising in price while the poor make money selling their time but there will be fewer and less jobs for inexperienced workers because of increased environmental protection legislation and higher minimum wage laws. "The best 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 speculative investments because fiat currency will be causing mal-investment everywhere. If you happen to be looking for a fast read on how fiat currency manipulation leads to bad decision-making I seriously recommend reading "The Clipper Ship Method" and "Whatever Happened to Penny Candy" by Richard Maybury.
A mentor of mine once related, "There is not such a thing as a good or bad economy" You can only ever be skilled or amateur in your interaction 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.