Chancer

Are We Becoming a Nation of Renters? Investing for the New Housing Dynamic

If Obama, Pelosi, and the rest of the liberal Democrats have their way, we will become a nation of renters and public transportation commuters with few Americans owning homes and cars. They want us to be just like Europe.

The way there will be a value-added-tax in Obama's second term (if re-elected) which will cause a huge increase in the cost of living, decrease living standards, and stop Americans from saving or accumulating wealth; causing more and morer people to live paycheck to paycheck and to become more dependent on handout from a socialist liberal Democrat government.

What REALLY Caused the Mortgage Crisis - And What to Do Now

IMO, the bubble run up in prices was caused (ignoring whose fault it was at the moment) by excessive demand by those who never should have bought homes they could not afford to pay for. Unfortunately, those who could afford loans, also paid inflated prices.

The excessive demand for the un-qualified (for loans) is not coming back. They will continue to be renters, which may help the rental property market.

The high prices may not return either until we get high inflation (after 24 months per Pimco's Bill Gross) caused by government policy.

Additional government policies that suck money out of the economy and the pockets of consumers in the form of higher cost of living are:

1- Higher taxes.
2- Higher interest rates (government debt).
3- Higher utility and energy costs ("crap" and trade, etc.).
4- Certainty of a VAT (value added tax) to pay for government spending (deficit) and the new liberal Obama Democrat socialist society.

VAT translates into significantly higher cost of living, reduction in living standards, and less discretionary income to buy a home. You have to pay higher prices to buy a refrigerator or a car to get to work, but you can rent instead of buy a home. Remember in Europe, most people rent and use public transportation.

I would not be an investor in stocks of home builders, as I believe large new housing developments will be a hard sell. It will take many years to absorb the national housing inventory that we have with those who can now qualify for loans. People will have to stop looking at homes as investments.

In states like CA with high taxes and anti-business policies, more business (jobs) will flee the state. The population who can afford homes will continue to decline. Senior citizens will also sell their homes to move to areas with cheaper home prices. This will continue downward pressure on home prices for a long time.