The $64,000 question seems to be arising again..."Are we entering a new housing market downturn"?
I had two occasions this week when the caller emphatically stated that another downturn is imminent and these are well informed industry experts. Many prognosticators believe that the next slump is set to begin. Many are unaware that the Dodd Frank Act not only permits sub-prime loans...it pretty much requires them.
A client in Nashville, TN was advised by his mortgage broker that he can refinance his loan but the broker believes that he should wait because of a looming downturn.
Naturally, when you do the same thing again and again, you can expect the same result. Sub-prime loans clearly have a higher default rate and it appears that the number of defaults of such loans is on the rise. As an aside, sub-prime auto loans are entering a dangerously high default rate.
I have a number of wealth and asset protection clients who are either divesting real estate holdings and/or limiting the impact of a perceived future downturn. It almost seems that the situation is analogous to the animals reacting before a storm.
A client in Netherlands is already asking me to look for opportunity in Las Vegas...he is that certain and I pay attention to him because he was correct in '08 - '09 and he got out before the worst of the damage occurred. He believes, and I concur, that the next downturn will have an even greater global consequence than the last cycle. I recently visited Mexico, Portugal and Spain on real estate scouting missions and the developers were positive and upbeat. However, the real estate brokers were not as optimistic. They talked the talk but it was easy to read between the lines because the concern was written all over their faces.
So, what does everyone believe? Anyone seeing any signs...good or bad? Seems like the cash buyers are already beginning to hover!!
Paddy Deighan J.D. Ph.D