Wednesday, July 25, 2007

Be vwery careful, vwery, wwery careful ... more on real estate and subprime time

As Elmer Fudd used to say ... be vwery careful ...

About investing in real estate or the subprime mortgage market. You know, just like NASDAQ circa 2000, it took speculators a long time to be convinced that, yes, things were really as bad as they seemed. And that was in the technology stock market, with its hyper-frenetic pace.

Image how long it'll take for *everyone* involved in the real estate market to realize the same. Today, it's just the subprime lenders who are depressed. Tomorrow it's the prime lenders ... and sometime thereafter ... by the real estate speculator ... then to be followed by the real estate investor ... to be finally ... finally ... followed by the deep-pocketed developer/builder.
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When even all those deep-pocketed guys can think about is surviving, then it's time to buy. And only then.

As I suggested one year ago, real estate debacles of this nature (i.e. free money from Greenspan) will take a long, long, time to boil off - expect market declines in coastal regions to continue for years. In farm country, however, things will be vastly different for several reasons.

Sit tight investors ... patience is now key if you're thinking of sub-prime investing (wait two years), or real estate developer/builder investing (wait three to five years). Yes, it takes a long time for this to unwind and people to become truly depressed about the future ...


The Confused Capitalist

1 comment:

stocksystm said...

I agree that patience will definitely be a virtue during this slow motion collapse. Expect the powers that be to do just about anything to bail out those who overextended themselves.

Most homebuilder stocks will eventually fall below $10 a share. Inventories are at historical highs and they continue to put out product.