Home Prices Have Nowhere To Go, .......But Up, Up and Away!!

Real Estate Agent with The Fischer Investment Group



In an article published today on CNBC.com, it’s reported that the US Treasury is preparing to roll out its Public-Private Investment Program (PPIP) plan. This program was originally intended to combine public and private money in a $ One Trillion effort to have investors buy bad loans and toxic assets from banks. The program is now only expected to involve $ 50 Billion.

The Article points out that the PPIP has encountered two problems: “the piles of bad debt sitting on the banks’ books and the dilemma of how to price this debt….Banks are still loathed to let go of assets at fire-sale prices.” The Article further points out… ”as long as these toxic assets stay on the books, they saddle banks with losses and constrict their ability to lend.” Read their entire article at the link listed below.


The point is that the Banks are holding a ton of loans on their books which they cannot afford to sell. If they were to do so, at the current market price of these loans, the Banking System as we know it would collapse. So, out of necessity, the Banks continue to hold all but a small portion of their bad loans.

This is why so many property owners have been allowed to stay in their homes for a year or more, without paying the mortgage or having their property foreclosed. The simple reason is that the Banks would prefer to have the property occupied and cared for, then vacant and vandalized. In the meantime, the property stays off the market and does not, therefore, contribute to the supply and further reduce current market prices. With the coming massive inflation, the Banks must expect property values to raise a lot more than their internal carrying cost.

The simple fact is that the only way to get the Banks to start lending again in volume is to have their underlying collateral (that is the value of the homes which secure their loans) increase dramatically in value. This would enable them to reverse their reserves, thereby increasing their capital base, and protect them from the exposure of having to write down more of their loan portfolio. Lending should then free up. Hence, with the coming inflation, look for a rapid increase in housing values, especially in those regions of the US where the economy is basically sound, but housing prices have dropped precipitously. It’s better for the Banks and for investors to hold on and wait. Massive inflation is just around the corner and we should all take advantage of it.

The Fischer Investment Group buys new property on behalf of our investors below market prices and at or below estimated builder replacement cost. We allow each investor to buy direct from the Builder at our negotiated price. In addition, all of our properties are complete and new, with a one year warranty, front to back. The communities are new and well groomed. So, our properties rent faster and at a higher rent factor. Due to the condition of the properties and the neighborhoods, it is not uncommon for many of our tenants to live a number of years in the same property. In essence, our risk is much lower, and our potential gain much higher. Since our properties have a positive cash flow it’s easy for our investors to sit back and wait to take advantage of the coming inflation. For more information, review our website, listed below.


Comments (6)

Rich Cederberg
eXp Realty - Albuquerque, NM
eXp Realty Agent Albuquerque

Thanks. Great information and nice website too. So the banks are in essence holding out, waiting for inflation to increase values?

Jul 15, 2009 07:27 AM
David Monsour
Keller Williams Keystone Realty - Gettysburg, PA
ABR - www.realty-insights.com

If this is true I can't say I'm surprised.  We all know inflation is right around the corner.  Rates have been held down forever and prices are rock bottom to keep some sort of money flowing whether it be real estate, food, cars...whatever. 


Jul 15, 2009 07:35 AM
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

This government either does not understand or does not want the public to understand that the market will end up determining value.  We can talk about this until we are blue in the face, but until there is a greater number of buyers than sellers and unemployment continues its trend, pricing will stay flat.  God willing, I hope to see unemployment figures start a move in the right direction by year's end to reverse the REAL trend in housing. I am rubbing this crystal ball, but I just can't see anything yet.  I will try again tomorrow.  I am a 10 year guy.  10 years from now, this discussion will be a non discussion, though we may be talking about a whole new set of issues created from action make to day.  As the world turns........

Jul 15, 2009 07:43 AM
Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

You make a really interesting statement "With the coming massive inflation, the Banks must expect property values to raise a lot more than their internal carrying cost." I hadn't really thought of it that way and I thank you for opening my eyes.

Jul 15, 2009 07:48 AM
Sean Overstreet
The Fischer Investment Group - Tampa, FL

I am glad this information is useful to you all. Not a lot of investors understand all that is going on behind the scenes.

Real Estate is the Best Investment that anyone can put there money in today as a Hedge against upcoming Hyperinflation in the future! Believe me, it is coming. So we have negotiated replacement cost deals with New Homebuilders in Key areas of the Country. Realtors like yourselves can refer investors to us & get paid a referral fee at time of closing. 

We have many Realtors that co-operate with us. Please feel free to contact us anytime at soverstreet@Fischer-Investment.com .

Jul 15, 2009 07:56 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

I agree that inflation is coming, the all important question is when. Knowing the answer to that question can may one wealthy beyond imagination. But the government will keep inflation under control as long as they have the means to do so; I think they will be able to do so for another year or perhaps even two.

Jul 15, 2009 08:12 AM