Real Estate and the Coming Doom

For some reason our buddies Res Ispa and Bill have assumed that since I believe a future increase in energy demand is going to be the straw that breaks the camel's back, that I am somehow unaware of the 50 tons of stupid monetary policy, and real estate bubble the poor thing's been trying to hold up.

As an unashamed conspiracy buff, I've been keeping an eye on ole Fred (Freddie mac). Yes, I believe there are some huge problems there, and of course, it has potential to be a major blow to the economy.

But people... Fred's problems are nothing compared to a few simple realities...

1) Damned near every house in America has a mortgage on it.
2) The majority of those houses have 2nd mortgages.
3) Of all the houses with mortgages on them, only about 1/4 are actually worth what is owed.

Ya know what that means? We're screwed. This entire recovery have been built on debt taken on by home-owners.

So does this mean it's time to sell your house and find something to rent? It depends on the situation. If you owe a ton of money on the house, and you think you can find a sucker to dig you out of the hole, absolutely! Sell it, and buy something you can afford.

If you own rental property... You can play it different ways. You think the market is gonna go down, you could always short it right? Sell your rentals now, and buy back more for a whole lot less. Either way, I don't think the future for the rental industry is bad at all. Lots of folks are fixing to lose their homes. The demand for rentals is gonna be sky high.

The world's going down the drain boys. Cheers!