Northern Ohio is pretty bad. I’m in Cleveland, about 3 months ago I shut my office down and began working out of my home. I was among the last few to go in my building. Downtown has become pretty bad. A broker who was 5 floor above me was stabbed in the lung right outside our bld in broad daylight for nothing but his cell phone. the guys that did it? Well, they wanted a warm bed and 3 meals a day in the ‘Grey bar hotel’.
The buyer pool has dropped by more than 75% and the renters don’t have the money to pay. I’m only taking section 8 in any of my units anymore because the cash renters don’t have the cash anymore.
There have been a large number of factory’s close down, including at least 4 different car factories. Small business are failing left and right. It’s pretty sad to see some of them go.
But of course, this is only affecting the middle class and the lower class. The upper class can’t seem to understand what everyone else is bitching about…
I’m sold on the idea that things are going to get bad. What I am not sure of is what to do now.
Do I buy cheap “Section 8” type properties in the city
Do I do nothing and build up cash
Do I dare buy my “dream home” now (at a discount). I have a 275K offer on a 375K home that my wife loves. All things considered - we may have to let it go, or try and get it for 200K (not likely - especially since we have already offered 275K)
The question I have is, will renters pay rent in a depression?
The question I have is, will renters pay rent in a depression?
Or would the government pass a law that renters can not be evicted, sort of like Billary’s plan to stop foreclosures for several months. Not being able to efficiently evict deadbeat tenants would KILL almost any rental business, especially if there would be a relatively high percentage of non-payers during an economic collapse. Unfortunately, I think this is a real possibility, especially with the socialists in charge.
Yes, I did and I’m still trying to decide if I’m going to vote for the socialist Obama in November or whether I can swallow hard enough to vote for the liberal McCain. Where is the conservative candidate? Neither will be good for business!!!
Personally, I try to keep in mind that economics is cyclical. We’re down now, and then we’ll be back up. People seem to think that whatever is the current state is the forever state, in boom times or bust. It’s cyclical in other countries too, the booms in China and India won’t last forever. Remember Japan in the eighties buying up real estate here. We were all supposed to be speaking Japanese by 1993.
Since the great depression there were a lot of safeguards put in place to avoid such a huge downward swing. As long as Bush is out of office, we should be able to avoid any (more) historical blunders. But with the world economy we are reaching some uncharted waters so I’m not completely without fear. Some good things right now though:
-My HELOC is at 5% and will probably drop again next quarter.
-Contractors that before would not return my calls or show up are now showing up to negotiate lower prices to get work. Sometimes I’m not there.
-Parts of CA will cashflow.
mikeincali – thanks for a more “positive” outlook. I guess the circumstances are different depending on where you are sitting geographically and financially. I’m in LA and I’m finding great business opportunities, but I know so many Americans are in such a distressful situation.
I agree that we cannot handle one more major event, and the point someone made about the fact that 15% of our population is already on government assistance is really sobering.
But what about the next big industry brewing: Green Tech? There is always something new on the horizon and I’m seeing a big shift in this direction. I’m hoping this will be the new shoe that stays on awhile. What do you think? I’m a parent as many of you out there are…I’m simply cannot accept that it’s all downhill from here. As Rookie said things are so manipulated and plus the government bails out businesses left and right (is there a name for business socialism? Bankruptcy protection?).
I really respect the points of view on this point – the regular posters are great. Do you recall a time when the economy had you concerned this way before and things recovered well? I think it’s our dangerous foreign policy on top everything else that giving Americans such a feeling of anxiety.
Who ever is President next…let’s just hope he/she is not boasting a “C” student intellect. The stakes are too high these days for stupid/lucky/privileged leaders.
The next person and cabinet they appoint need to be as sharp as they get, sorry but when you’re 71 I’m less confident about your vision for the next 50 years. ALOT of people have a problem with McCain’s age – a gen-Xer, I see him as keeping an old, broken wheel turning. Who turns to their grandparent for their vision of the future? Nobody! Time for some fresh blood.
I personally watch what is happening in the REAL WORLD. The real world means TALKING to people IN BUSINESS. Here’s what I am hearing.
Local restaurant owner…this place was like going to a contractors convention for coffee every morning. I could get 3 quotes from 4 different trades by just stopping in and having some eggs. How’s her business doing now??? DOWN 50% OVER LAST YEAR!!! And her costs are THROUGH THE ROOF!( Rice up 100%, Flour up 100%, cooking oil up 75%, Sugar up 60% Heating oil up 50%)!! Her customers are too busy LOOKING for work now (or NOT working at all). It’s not like it was during the boom when they had more work than they could do. They have to FIND it now. Plus GAS prices are KILLING these guys.
Local lumber yard…quote from the owner…"This is as bad as it was in 1991!!! I’m cutting lines of credit to guy’s who’ve been coming here for years because I’m getting stiffed on materials.
Do a little research and see how many States in this country are running RECORD deficits??? I’ll save you the time, it’s 25 out of 50!!! You might say…well who cares??? The FEDERAL Goverment has run HUGE deficits for years, what’s the problem???
There’s BIG difference…The FEDS can SELL Treasuries to run a Goverment that spends more than it takes in. STATES CAN NOT DO THIS…They either CUT or they RAISE TAXES!!
Now on the surface CUTTING may seem like a GREAT thing…The PROBLEM is that puts even MORE people out of work and the SPIRAL continues down…Property values CONTINUE to fall, landlords face even smaller tenant pools and the renters they DO have, just found out the state is cutting their aid!! Other businesses are FURTHER affected, and on and on
I just found this article… I think it’s especially interesting because many of the guy’s on this site who warn of what’s coming keep being told we’re too negative. It’s not NEGATIVITY…It’s REALITY. Read what this guy thinks… you may recognise his name…
In the long run Sunnysky is exactly right…This too shall pass. You just DO NOT want to get into any type of deal that HAS TO WORK or your screwed, during this point in the cycle. The only deals I do when the economy is this bad are NO BRAINERS. The $190K house that needs $10K worth of work that you can buy for $100,000 is a NO BRAINER. Adding new buildings to an exsisting self storage business because ALL of your units are filled by people losing their homes is a NO BRAINER. I would NOT go NEAR any type of new HOUSING projects at this point. Same for CONDOS.
To the guy who mentioned the “wheel barrow story” about the woman with a wheelbarrow full of money to buy food - I have a book that prophecies that a day’s wages will buy a loaf of bread. Best book ever written.
My 2 cents have already been written by everyone else at this point. Good thoughts by all.
On the other hand, as a leveraged real estate investor, I like to own inflation driven commodities such as real estate and to repay my loans with inflated dollars. As much as I hate $4/gallon gasoline, I like that inflation can be a real estate investor’s friend.
I would like to appologize to all the forum members. I was completely off base with my inflation gloom and doom and I’m terribly embarassed that I posted that. The government just posted the latest inflation numbers and inflation is EXTREMELY LOW (almost not worth mentioning really).
I don’t know how I ever thought inflation was getting out of control. Maybe it was the gas prices increasing more than 25% in the last 6 months. Maybe it is that food prices are skyrocketing. Maybe it was that fire extinguisher I bought last week that is up over 30%. I don’t know, BUT I’M SURE THAT THE GOVERNMENT IS TELLING US THE TRUTH! According to the just released government CPI numbers, gas prices were down 2% last month. I’m sure that’s true. After all, those are national numbers and we all know that all gas is local. I think those EVIL RACIST oil companies are targeting Ohio Hillbillies for higher gas prices, while the rest of you are enjoying cheap fuel.
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
Prices are low!
I estimate rebar for a living and we are seeing major price increases as well. In January, a ton of steel was going for $700. Right now it is $1,300 a ton and beginning June 1, it will be $1,400. Now I’m no pessimist by any stretch, and I think things are getting UGLY as we type!!!
“ARM mortgages may prove to be USEFUL to first time homebuyers” quote made by Alan Greenspan 2005 during Senate testimony.
“The Sub-prime problem is CONTAINED” … 2007
“Inflation is LOW”
“There is NO RECESSION”
“Housing has hit BOTTOM” …spring 2008
“Job creation is STRONG”…2008
“There is no FOOD SHORTAGE in the USA”…2008…just as Walmart institutes LIMITS on rice purchases!!! AND…Brazil completely STOPS exporting their RICE!!!
Buffet said it better than I ever could…"This recession is going to be LONGER and DEEPER than MANY people expect!!! One of the FEW that really GETS it.
I just heard Jim Kramer on CNBC say that things will be a LOT better in 18 months, probably sooner! My hero! Of course, he said that Bear Stearns would be ok a couple of days before they went belly up!
I can STILL win the democratic nomination!!
I can STILL win the democratic nomination!!
I can STILL win the democratic nomination!!.. :rolleyes
I get a letter at least once a month from a supplier stating another increase. The latest was my refuse company now applying a fuel surcharge, which most of my vendors have been doing for some time now. I was speaking to our salesman from my roofing & siding supplier and he expects roofing to be around $80/square by summer (I’m used to paying $40-$50).
:shocked
I just got done watching a movie, 2 hours long, that I found to be very informative in light of the current situation we have been discussing. If you are deep in faith, you may want to skip part. Part two is a lot of the same info we have seen over the past few years put into a little more clear & telling story line. And part 3 really explains why the current situation in our country is what it is.
I was particularly interested in the section that discussed the great depression and how/why it happened the way it did. I see some pretty obvious similarities between what happened then and what is happening now.
If you have a question about what the Moderators are doing and why, you should send them a note and not post a note in the middle of someone else’s thread effectively hijacking the thread.