SIX REASONS THE REAL ESTATE RECOVERY WON'T....RECOVER, THAT IS...SOON!

A middle-school teacher always told his class (I was in it) AN OUNCE OF PREPARATION IS WORTH A POUND OF CURE.....get prepared for the next leg of the American Real Estate Adjustment...

I have written, many times, and dealt with ALL of the items on Morningstar's Bearemy Glaser's list, however, he has hit ALL SIX CYLINDERS of the current real estate economic situation (story below).

The last item on his list is the one I consider the most important and most devastating.  When interest rates increase...

AS THEY MUST...SOON...

the real estate market MUST adjust downward because...

RICH FOLKS ARE NOT GOING TO LIVE WITH THE PO FOLKS...AND THE PO ANIN'T GONNA LIVE IN THE CENTER CITY...

Too simplified? 

Ok, when the COST of something (houses goes up) and there is ALREADY little or no demand for that something (houses)...the PRICE goes DOWN...not up.

Here's Bearemy's article:  First she short sweet version...

This week, we will look at six reasons why demand isn't likely to pick up."

1. Unemployment

2. Household Formation

3. Shadow Inventory

4. Underwater Mortgages

5. More Stringent Mortgage Requirements

6. Rising Rate Environment

Now, we'll view the entire article to see why all of this makes sense...it does to me...

http://news.morningstar.com/articlenet/article.aspx?id=383192

CNBC predicts a second dip in housing sales which means more foreclosures and more displaced homeowners. Google March 23rd Gary Schilling interview.

California has a 900 mile coastline and NO ONE is capable of building anymore coastline. The Los Angeles Basin is bordered by the mountains on the east, the Pacific Ocean on the west, San Diego on the south and Malibu on the north. The warm desert breezes run into the cool ocean breezes and create a Mediterranean climate that everyone in the world to aspires to experience. However, right now, California real estate is experience the same downturn that every place in America is currently experiencing.

The farther down the property values descend during this economic slowdown (the Great Recession of 2006-2020?) the more properties which will fall below the "underwater line". This means that the loans on the property are larger than what can be paid by selling the property at current market value (CMV).

Apartment Building Investments in Orange County CA are going to be a spectacular move in the very near future and will begin their upside value appreciation as the single family market continues to deteriorate. The more homeowners who lose their homes to foreclosure or short sale, the more apartments will be needed. Building new apartments in North Orange County, CA is nearly out of the question because the cost of small vacant parcels makes the cost of new construction prohibitive. Over the past 20 years the Cities have created such stringent "off street" parking restrictions that most of the older 4 Plex sized parcels no longer qualify without a costly building code "variance".

So, buy Orange County Apartment Buildings before the prices and interest rates go up, again. Call me Now!