More doom and gloom, or just hot air? He also talks about mortgage financing.
IMHO, I think there will be pockets of slowdown and pockets of rising markets.
http://money.cnn.com/2006/05/05/news/newsmakers/buffett_050606/index.htm
Warren Buffet isn’t know for speaking gloom and doom. As I’ve been saying for months, there is a bubble and it is in the process of deflating right now. It won’t hit bottom until 2008. In combination with the ridiculously loose lending practices of the past few years, things are going to be ugly and many people will lose everything. There will be a government investigation into the loose lending practices and new laws will be written. If the bust is big enough, someone will have to go to jail. It happens every time.
Every time in history that there has been rampant speculation, whether it is tulips, tech stocks, or real estate - there has been a correction. The optimists always say that somehow it’s different this time - it is not!
The real question is how can you make money during the bust? My money is on rentals.
The REI fad is over - now back to business!
Mike
I agree with propertymanager. The buy and sell and make a profit guys will get stuck in that game of musical chairs. If you make your own equity, buy below market value because of the property’s terrible condition, fix it up and rent it for a positive cash flow, you will come out ok. I just made an offer this morning on a house 3-2-2 2500 sqft (a little big for me I usually stay around 1500 sqft) this house comped out at $149k I offered $88k it will need about $15k in repairs. It will lease for $1250 in the area but my PITI is projected to be around $750/month. When times get lean, I can throttle back on rent to $850 and still be positive. That is what making your own equity can do for you.
Buying and renting has been my strategy since the begining, unfortunately I have had to sell several. When these people lose there houses because they can not afford them they will still need a place to rent. I don’t think all areas are going to be affected by the bubble. Here in North Dakota the prices are still reasonable.
NDI
In my opinion Real Estate Investing will always be here. Someone will always need a place to live and someone will always sell their houses because of a bunch of “circumstances” that can’t be avoided. In all investing there is what you call corrections. Most of those corrections are to scare off people who use fear to run their investing.
There is a bubble in Real Estate…some places are way overpriced and changes are
ahead in REI. You can’t fear those changes you have to learn from the changes and
make sure you can turn those changes around to benefit your investing. (Just like Propertymanager said).
It’s people who want things to stay the same will get affected by those changes.
Good Luck and Happy investing