I also appreciate this site tremendously and I feel that I have made better financial decisions too. I usually pop in every day for over a year now.
Just remember everyone, that this has been the biggest and longest housing bubble ever in this country’s history. To think that its gonna take only 1-3 years to bottom is a little naive considering that the last correction took about 6 years (1990-1996) and that was following a 4-5 year bubble(1985-1990). This has been a 10 year bubble period. (1996-2006). I just think it is possible that we won’t see a bottom until after 2010, maybe up to 2012. Housing prices aren’t falling as fast as we thought they would, and they haven’t really fallen that much at all, yet…
Maybe this will be different due to MASS foreclosures and “internet awareness”, but I expect the fed + current homeowners + the whole RE industry/home builders/lenders to come up with numerous ways along the road to try and prevent economic nature from running its course so that they can lock in profits, buy time to get out, keep shareholders invested, or postpone the inevitable, and blame the next guy or pass the buck.
If I had to guess what was more likely to happen in the next 6 months..
Scenario A: the dollar continues to lose value and inflation remains very high(higher than the fed wants us to believe) due to the fed creating even more credit and/or lowering rates again. This scenario would have its own problems, the first being that the purchasing power of the dollar is lost, thus goods and services cost more, and our quality of life suffers.
Scenario B: America gets smart, realizes its mistakes, and lets housing do its thing (collapse) and then the stock market follows, then employment follows eventually leading to a (somewhat healthy)recession. I call this the REAL wake up call.
I tend to think scenario B is the best thing to do, but I think scenario A is easier to do, and will catch less “flack” from investors/wall street. If they choose A, they can kind postpone scenario B, which someone else may have to deal with and take the blame for. BTW scenario A will make scenario B much worse. I think America needs a wake up call, but I’m afraid they don’t have the strength, so I will put my money on A for now.
Think its never been done before, Alan Greenspan did it for about 5 years, then handed a strong “looking” economy over to Bernake last year. Take away the easy credit(including subprime), and now how strong are we?
Hopefully this time, the housing correction happens faster than in the past, but I really don’t expect any big bargains in 08 or 09. Hopefully I’m wrong. Happy investing.
