farmer448

An Alternative to the Trillion Dollar Deficit

This is more of trying to treat the symptoms.

The residential real estate market was overbuilt due to speculators and poor underwriting. This was the trigger not the cause of the current recession.

So we have a lot of homes/condos/strip malls that were built based on phantom demand. We have even lower demand from 2 years ago due to loss of JOBS. No work no home.

So we are now working out way down the demand curve to find the true demand. Will we overshoot to where supply will be the constraint.

In the above solution, we are trying to build some more phantom demand by artificially lowering interest rates.

Sorry folks, as in the S&L crisis of the 1980s we are going to have to let real estate find its new equalibrium point. The sooner this happens the better the foundation for real estate going forward in the future.

Here in Houston it took the better part of 3 years, so we are about half way down the path of this correction.

It is time to look long term as short term is going to be a rcoky and bumpy road. For investors, that means looking for where the growth will be as we work our way out the fine mess we find ourselves in.