My prediction for 2014 is short and sweet. "More Fed. impulse ahead causing mal-investment in localized asset bubbles". I will say that again but in English this time: People do foolish things with fast money and there is a lot of easy cash floating around. Hence when you get some of this easy money do not be foolish with it!
The current level of prosperity in the States is being fueled by the "wealth effect" which is fueled by massive govt impulse supporting asset costs (usually the stock market and to a much lesser degree the housing market as well). The prosperity feels real from the standpoint that folks are spending money again. Nevertheless this is a game of musical chairs and you won't want to be the last one standing.
Business impulse through the printing press is like using a drug that makes you feel great until the buzz wears off; then you have got an business hang-over worse than your original problem. I believe we are at the end of the commercial hang-over made by the last boom and bust cycle and we are just ramping up the enraptured sense of the prevailing QE (i.e. Cash printing) infinity inflationary cycle.
Here are my categorical predictions about what's coming in 2014. Only a few people are bold enough to make specific predictions as the more specific you're the simpler it is to be wrong (and most people hate being wrong). Take these predictions with a pinch of salt. Forward this to your friends and use it as a conversation starter. You need to use the dialogue to make up your own predictions for the year. I really need to hear your feedback.
2014 Business Predictions for Investors In Property
Real estate rents, salary, food, interest rates and energy costs will rise moderately 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 five percent by July and hover in the low 5s through the close of the year. Business mortgage rates will be lower than residential mortgage rates because commercial banks will remain flooded with cash and have no one to loan it to. Home interest rates will creep up as the govt withdraws stimulus from that part of the market in an effort to moderate housing price expansion.
Wall Street funds that purchased large portfolios of foreclosed homes will begin to liquidate their single family holdings because of accelerating adjustable rate mortgages. (Many Wall Street investment funds bought homes with short term adjustable rate loans and those loans are either coming due or are having a look at the chance of rising IRs.) These Wall St funds never meant to be permanent owners (and they aren't superb at it). With home prices up this is a very good time for these funds to start cleaning up their portfolios by liquidating their most troublesome and most price inflated properties. The releasing of this inventory will put a downward price pressure in those markets who had the highest rates of appreciation from the trough. I might be particularly cautious about creating a position in Vegas, Phoenix, San Francisco Bay and Southern California and if I already had a large profit tied to a property in one of those markets I might consider exchanging out of it.
I remain a huge fan of the Dallas-Fort Worth metro. I do have a private bias for letting you know about that market because we are building and selling rental homes in Dallas and Fort Worth, but there are some other really smart people who are very bullish on Texas. Visit our website for a great video by the North Texas Economic 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 as much as I like Texas. I envision all the major towns and tiny oil towns in Texas will have 6-10% housing price and lease increases along with lower rates of vacancy (6.5% vacancy or less).
Bitcoin will get more media interest, but its pricing will become even more changeable such that only the black market economy will really. Accept it for payment. Governments around the planet will find some way to tax bitcoin.
Stock costs will become highly unsteady in 2014. Watch for heart wrenching price swings of 10-15% up and back down in a stated month. Stock traders will make record profits in 2014. Stock backers will end the year sideways or down.
The rate of unemployment is far worse than the published numbers because many individuals who've expired off unemployment benefits and have stopped looking for work, or they have moved onto the rolls of Fed. incapacity. States pay for unemployment benefits but the Federal Agency pays for disability so money strapped states are moving folk off unemployment benefits and onto Fed. incapacity benefits as a means of balancing their budgets. Those on disability aren't counted as under-employed.
Expect to see a jobless industrial recovery. The gap between the well-off and the poor will broaden because the well-off earn cash by owning assets which are skyrocketing in price while the poor earn money selling their time but there will be fewer and fewer jobs for unskilled workers as a result of increased environmental protection legislation and higher minimum wage laws. "The easiest 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. When you are looking for a fast read on how fiat currency manipulation leads to bad decision making I strongly recommend reading "The Clipper Ship Methodology" and "Whatever Happened to Penny Candy" by Richard Maybury.
A trainer of mine once related, "There is no such thing as a bad economy" You can only ever be skilled or unskilled in your interactions with the economy.
[Editor's Note: Be sure to see our new Better Business Bureau Review].
The current level of prosperity in the States is being fueled by the "wealth effect" which is fueled by massive govt impulse supporting asset costs (usually the stock market and to a much lesser degree the housing market as well). The prosperity feels real from the standpoint that folks are spending money again. Nevertheless this is a game of musical chairs and you won't want to be the last one standing.
Business impulse through the printing press is like using a drug that makes you feel great until the buzz wears off; then you have got an business hang-over worse than your original problem. I believe we are at the end of the commercial hang-over made by the last boom and bust cycle and we are just ramping up the enraptured sense of the prevailing QE (i.e. Cash printing) infinity inflationary cycle.
Here are my categorical predictions about what's coming in 2014. Only a few people are bold enough to make specific predictions as the more specific you're the simpler it is to be wrong (and most people hate being wrong). Take these predictions with a pinch of salt. Forward this to your friends and use it as a conversation starter. You need to use the dialogue to make up your own predictions for the year. I really need to hear your feedback.
2014 Business Predictions for Investors In Property
Real estate rents, salary, food, interest rates and energy costs will rise moderately 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 five percent by July and hover in the low 5s through the close of the year. Business mortgage rates will be lower than residential mortgage rates because commercial banks will remain flooded with cash and have no one to loan it to. Home interest rates will creep up as the govt withdraws stimulus from that part of the market in an effort to moderate housing price expansion.
Wall Street funds that purchased large portfolios of foreclosed homes will begin to liquidate their single family holdings because of accelerating adjustable rate mortgages. (Many Wall Street investment funds bought homes with short term adjustable rate loans and those loans are either coming due or are having a look at the chance of rising IRs.) These Wall St funds never meant to be permanent owners (and they aren't superb at it). With home prices up this is a very good time for these funds to start cleaning up their portfolios by liquidating their most troublesome and most price inflated properties. The releasing of this inventory will put a downward price pressure in those markets who had the highest rates of appreciation from the trough. I might be particularly cautious about creating a position in Vegas, Phoenix, San Francisco Bay and Southern California and if I already had a large profit tied to a property in one of those markets I might consider exchanging out of it.
I remain a huge fan of the Dallas-Fort Worth metro. I do have a private bias for letting you know about that market because we are building and selling rental homes in Dallas and Fort Worth, but there are some other really smart people who are very bullish on Texas. Visit our website for a great video by the North Texas Economic 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 as much as I like Texas. I envision all the major towns and tiny oil towns in Texas will have 6-10% housing price and lease increases along with lower rates of vacancy (6.5% vacancy or less).
Bitcoin will get more media interest, but its pricing will become even more changeable such that only the black market economy will really. Accept it for payment. Governments around the planet will find some way to tax bitcoin.
Stock costs will become highly unsteady in 2014. Watch for heart wrenching price swings of 10-15% up and back down in a stated month. Stock traders will make record profits in 2014. Stock backers will end the year sideways or down.
The rate of unemployment is far worse than the published numbers because many individuals who've expired off unemployment benefits and have stopped looking for work, or they have moved onto the rolls of Fed. incapacity. States pay for unemployment benefits but the Federal Agency pays for disability so money strapped states are moving folk off unemployment benefits and onto Fed. incapacity benefits as a means of balancing their budgets. Those on disability aren't counted as under-employed.
Expect to see a jobless industrial recovery. The gap between the well-off and the poor will broaden because the well-off earn cash by owning assets which are skyrocketing in price while the poor earn money selling their time but there will be fewer and fewer jobs for unskilled workers as a result of increased environmental protection legislation and higher minimum wage laws. "The easiest 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. When you are looking for a fast read on how fiat currency manipulation leads to bad decision making I strongly recommend reading "The Clipper Ship Methodology" and "Whatever Happened to Penny Candy" by Richard Maybury.
A trainer of mine once related, "There is no such thing as a bad economy" You can only ever be skilled or unskilled in your interactions 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.
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