Advancing Time: Housing Crash Will Not Hit All Areas Equally

Advancing Time: Housing Crash Will Not Hit All Areas Equally: You may have been hearing that housing prices are about to crash and that prices are already falling in many areas. This storm will not hit ...

Housing Crash Will Not Hit All Areas Equally

You may have been hearing that housing prices are about to crash and that prices are already falling. This storm will not hit all areas with the same force. It is a fact that if this does occur, the housing cash will not hit all regions equally. I contend big Mac mansions will take the bulk of the beating. Also, coastal areas where the prices have rocketed to the moon are subject for a pullback. 

Weather and environmental concerns remain an issue as do regulations on how they must be rebuilt following storm damage. In a recent video, MHFIN explores the growing concerns about a potential real estate market crash, focusing on insights from economist Robert Shiller. In this video, they draw parallels to today's market, particularly in the southern United States. They focus heavily on why some experts believe we may be headed for another housing downturn.

I, on the other hand, believe the first pullback in prices has started but after the nervousness subsides, some sectors of the market will do rather well. This is a situation of supply and demand. Finding safe stable reasonably priced housing with amenities remains in short supply. During times of economic uncertainty, people who want to move and buy, will seek safety.

Many Older Northern Cities Fail To Meet What Boomers Want

Older modest homes fall into this category, especially homes modest in size. They also have lower taxes and insurance. A big factor in where support will come in has to do with cash buyers. If enough people are able to get out of the markets with a fair share of their wealth, many will be cash buyers. Many of these buyers are older and ready to downsize. Another huge bonus is not having to do massive and expensive remodeling.  

Sellers best not wait as home prices may fall 50-80% says economist and best-selling author, Harry Dent. Using data from the past as well as looking at the type of people that buy comprise the housing market he argues a wild market is about to unfold. Still, in a rant, he claimed even if a bust occurs it is likely the Fed will crank out massive amounts of liquidity in an effort to limit the pain. 

Around 23 minutes into this Sachs Reality video, Dent turns his attention to demographics. I see this as another factor supporting "certain types" of housing. Many of the large numbers of baby boomers who are retiring are in their last homes. They are downsizing and want safe stable reasonably priced housing with amenities. I argue this might even give off-the-coast retirement communities in the south a boost. When looking into the numbers, I was surprised at how affordable they are.

Safe, Stable, And Reasonably Priced Checks A Lot Of Boxes

The older well established communities, often located around seven miles inland, avoid the recent rise in construction cost and in some cases are better built than their newer rivals. In the last few years, efforts to save money and the use of cheaper materials have reduced the quality and longevity people want. Yes, the type of housing, and location matter, if and when a housing crash does occur, the housing crash will not hit all areas equally. 

States with warm weather and low taxes will do best. Looking at the cost of living in one Florida community, the average HOA fee of around $500 a month took care of all the exterior maintenance and more, plus it provided a slew of amenities. This includes walkways, lakes, and an extensive community center. This means, that cash buyers with one or two hundred thousand dollars, could enjoy retirement living for far less than renting an apartment just about anywhere.  

 

 (Republishing this article is permitted with reference to Bruce Wilds/AdvancingTime Blog)

Advancing Time: Trump's Economic Advisers Send Mixed Messages

Advancing Time: Trump's Economic Advisers Send Mixed Messages: Recently Trump's economic adviser Stephen Moore weighed in on 'Fox & Friends Weekend. The topic was the impact of the Amazon and...

Trump's Economic Advisers Send Mixed Messages

Recently Trump's economic adviser Stephen Moore weighed in on 'Fox & Friends Weekend. The topic was the impact of the Amazon and Starbucks strikes during Christmas. Moore warned how the actions these workers were taking could backfire. All in all the interview did little to reassure me that the direction the Trump economic team was going to move us in the direction of economic Utopia. 

What Policies Will We See And How Well They Will Work?

While I have been supportive of the idea we need tariffs as a way to level the playing field when it comes to trade. I have concerns about some of Trump's proposals and his ability to push them through. The huge pork filled bill that easily just passed Congress to keep the government open screams fail to the idea anything is about to change. 

Both the Democrats and Republicans make up the "uniparty," a term to suggest that our ostensibly separate political parties function as a single party when it comes to approving new spending. This makes it difficult to think the razor-thin margin of Republicans forming the new Congress will be any more successful at curbing future spending. Adding to my woes are talks about the government diving into investing in Bitcoin and a number of other questionable ideas.

Still, the focus of this article is more on what flowed from Moore's mouth during the interview. Moore repeatedly endorsed Amazon a company that has done huge damage to Main Street and small businesses on a number of fronts. Yes, Amazon, with the help of our government, has unleashed a wave of "creative destruction" that has altered our society, but it could be argued, not in a good way.  

Moore then pushed forth how Americans under Trump should expect to see their wages go up but missed telling us how this would lower inflation. Nowhere was talk about increasing productivity. Forget the spin, this is not about whether someone is for or against unions, it is about producing a sustainable economy by increasing productivity.

Placing big business over America's small businesses that have suffered over the years is reason for concern. These large companies have lobbied their way to prosperity and are eating the lunch of American workers. If Amazon had to act the way other companies had to, it most likely would not exist.

Then there is DOGE, the "Department Of Government Efficiency." This newly created organization, headed by billionaires Elon Musk and Vivek Ramaswamy is promising to slash at least $2 trillion from the federal budget. Much of it by slashing the number of government workers and whole departments. Both claim they can downsize the federal workforce by forcing employees to return to the office, which they hope would prompt many of them to quit.

The duo, as outside advisers, have targeted areas such as the Internal Revenue Service, the Department of Education, the Federal Bureau of Investigation, and the Nuclear Regulatory Commission. They also want to review foreign aid, defense spending, and the inaccurate payments the government sends to Social Security recipients and others.

At an event in Philadelphia on October 18, Musk said, "We will reduce a lot of government headcount, but we're going to give very long severances. Like two years, or something like that." He went on to say, "The point is not to be cruel or to have people not be able to pay their mortgage or anything."

Taking a big chunk out of federal spending is easier said than done. Much of the budget supports mandatory programs, which must be funded by existing laws. Also, there are many high hurdles to clear when it comes to firing Federal workers. Paying them long generous severance pay will do little to halt spending. 

We have heard many promises of huge tax cuts mixed in with promises of cutting deficits. Trump's economic advisers are sending mixed messages, what they can or will do is still very much up in the air. I need to see results from DOGE, regulations cut, and real help for small businesses throughout America before I get excited. It might be wise to put the celebration on hold until we see results rather than just promises.

 

 (Republishing this article is permitted with reference to Bruce Wilds/AdvancingTime Blog)

Advancing Time: The Fed Should Not Follow The Path Of The BOJ

Advancing Time: The Fed Should Not Follow The Path Of The BOJ: America and the Fed may not be able to follow the path the Bank of Japan forged over the years, and it should not. Cutting rates and buying ...

The Fed Should Not Follow The Path Of The BOJ

America and the Fed may not be able to follow the path the Bank of Japan forged over the years, and it should not. Cutting rates and buying long-term bonds to artificially keep rates low may not work when it comes to the US dollar. The big difference is that the dollar is the worlds reserve currency, and the yen is not. 

More Fed Intervention In The Markets Destroys True Price Discovery

A massive increase in the Fed balance sheet is a scary prospect and opens the door for central banks across the world to do likewise. This hogties the Fed's options going forward. While everything is relevant when it comes to fiat currencies, this notion is hijacked by the advantage the dollar gets from being the worlds reserve currency. Currently this advantage is fully built into valuations. 

It is kind of a "weird" thought that the Fed might move in this direction voluntarily. Most likely such a shift would only occur if the global financial system was coming apart at the seams. Even then, increased intervention would not be a "cure all" and likely make things even worse.

In a past article. I built a case that the BOJ, by buying all of Japan's bonds and a huge quantity of stock market ETFs, was in effect nationalizing the country. Buying all the debt used to finance Japan's government and propping up Japan's stock market put it on the path towards owning everything. The piece focused on the flaw of creating a false and unsustainable economy. This type of action is not good for the fiat currency of any nation.

Any indication the Fed might follow the BOJ's footprint would have huge ramifications for global markets. When central banks or the government becomes a buyer they are generally don't care what the price is, this destroys true price discovery. Tied to resonable valuations are inflation expectations and long-term stability. 

More intervention in markets could also unleash a bomb in the derivative markets, and that has the potential to do far more damage than any move to slash rates would create. This dovetails with the idea the Fed has painted itself into a corner. Still, we should not underestimate the many other ways and tools central banks and governments have to postpone the day of reckoning. 

 

(Republishing this article is permitted with reference to Bruce Wilds/AdvancingTime Blog)

Advancing Time: Revisiting, "This Time Is Different"

Advancing Time: Revisiting, "This Time Is Different": Efforts to justify the most recent market melt-up following the election of Donald Trump are difficult to comprehend if you are one of tho...