Friday, May 20, 2011

Home Prices Fall 57 Months in a Row

Home prices have fallen 57 months in a row, losing another 3% in the first quarter of 2011.

Um, where are all the real estate gurus who sold rental properties as a path to financial independence now?

These fools were wrong when they said 2001-2006 was the "best time in a generation" to buy real estate.

Turns out, it was the worst.

These salesmen (not investors) were wrong again when they claimed all those motivated sellers and foreclosures hitting the market in 2007 through 2010 were "bargain opportunities"---or again the best time in a generation to buy real estate.

Sorry, prices are still falling.  Remember when investing "The Trend is Your Friend"?

Well, guess what?  These same dimwits are STILL pitching the same rancid message in some cheesy hotel ballroom to yet another crowd of newbies just waiting to be fleeced.

Real estate prices are falling, and will continue to fall for at least 2-3 more years.  Read this post I wrote on June 10, 2009 predicting the same.  Or this one from September 25, 2010.  Same message.

How do home prices go higher when VIRTUALLY EVERY CATALYST that could lift them higher is headed in the wrong direction?

Interest rates?  Headed higher.

Mortgage underwriting standards?  Tight, and getting tighter.

Supply?  Lots, and a huge shadow inventory measured in years.

New buyer demand?  No, fewer people want to own homes these days.  Young people want apartments, not condos or houses, and have too much student loan debt to afford much of a house anyway.

Rising sales?  No, in 2010 a full quarter of all "real estate sales" were foreclosures.

Abundant supplies of mortgage capital?  No, Freddie and Fannie are heading towards oblivion and a private underwriter means higher interest rates.

The gurus will never go away.  But that does not mean you have to buy their products and seminar tickets.