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Old 04-13-2017, 08:00 PM
 
Location: Washington Park, Denver
6,904 posts, read 6,494,653 times
Reputation: 7353

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Quote:
Originally Posted by Jobster View Post
Doesn't have to be about peak oil. It's about solvency. That's what will cause a freeze in production. That and the fact that CAPEX has gone down considerably.
It has nothing to do with peak oil. I was using it as an illustration of another ridiculous theory similar to yours.

CapEx is fluid. I have a friend who is GC for a pipeline company. They are still building. There are other reasons why the economy could falter, but the likelihood of it being because of a prolonged oil price spike is very, very low.
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Old 04-13-2017, 09:01 PM
 
3,276 posts, read 1,481,366 times
Reputation: 2458
Quote:
Originally Posted by SkyDog77 View Post
It has nothing to do with peak oil. I was using it as an illustration of another ridiculous theory similar to yours.

CapEx is fluid. I have a friend who is GC for a pipeline company. They are still building. There are other reasons why the economy could falter, but the likelihood of it being because of a prolonged oil price spike is very, very low.
I hope you are right, but my understanding is that many of the loans given out were high yield in nature, and defaults have been climbing for the past few years. The worry for me is the amount of derivatives that are tied to the models that attempt to predict the probability of default. If the models are wrong, it could result in substantial losses.

When I was referring to capex, I meant for offshore projects, which are long term, but also result in a steady supply. Additionally, the amount of oil reserves reported in the US by the EIA suggests that the amount of active reserves declined in the past year. This indicates to me that exploration budgets have been cut.

This could mean that we are relying on existing reserves, which will continuously decline if we discontinue exploration or if exploration has not resulted in the reserves necessary to sustain society at its current resource consumption rate.

However, I do hope you're right, but at the same time, I think it would be beneficial if prices dropped slightly at least, which would make housing slightly more affordable without impacting those who are invested reasonably. Those who rely on leverage significantly, may find problems if their residents are unable to pay rent, which could result with a loss of employment in the retail sectors.

I think it's only prudent for things to slow down. Rapidly rising prices typically only benefit speculators, but are not good for businesses nor families that desire a place to live. While supply and demand drive the market, greed can destroy the market because as home owners and investors demand more and more out of their customers, they take more money out of the economy which has an impact that is being felt in retail.

Either way, I cannot predict the future.
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Old 04-13-2017, 09:08 PM
 
Location: Washington Park, Denver
6,904 posts, read 6,494,653 times
Reputation: 7353
Quote:
Originally Posted by Jobster View Post
I hope you are right, but my understanding is that many of the loans given out were high yield in nature, and defaults have been climbing for the past few years. The worry for me is the amount of derivatives that are tied to the models that attempt to predict the probability of default. If the models are wrong, it could result in substantial losses.

When I was referring to capex, I meant for offshore projects, which are long term, but also result in a steady supply. Additionally, the amount of oil reserves reported in the US by the EIA suggests that the amount of active reserves declined in the past year. This indicates to me that exploration budgets have been cut.

This could mean that we are relying on existing reserves, which will continuously decline if we discontinue exploration or if exploration has not resulted in the reserves necessary to sustain society at its current resource consumption rate.

However, I do hope you're right, but at the same time, I think it would be beneficial if prices dropped slightly at least, which would make housing slightly more affordable without impacting those who are invested reasonably. Those who rely on leverage significantly, may find problems if their residents are unable to pay rent, which could result with a loss of employment in the retail sectors.

I think it's only prudent for things to slow down. Rapidly rising prices typically only benefit speculators, but are not good for businesses nor families that desire a place to live. While supply and demand drive the market, greed can destroy the market because as home owners and investors demand more and more out of their customers, they take more money out of the economy which has an impact that is being felt in retail.

Either way, I cannot predict the future.
You went in to the derivative rant last time we had this discussion. Last time you were saying it was credit default swaps on automotive loans that would wreck the economy. Could happen. Maybe. I hope we're smarter this time around.

It is clear that they were the nitroglycerin last time around, but what I don't understand is how you think they relate to an oil spike.

With the newer fracking technology, oil reserves are plentiful and cheap to access. It very unlikely that Oil would stay above $100 a barrel for any extended time period. Renewables are also easing some of the demand strain and will continue to grow.
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Old 04-13-2017, 09:12 PM
 
20,836 posts, read 39,052,603 times
Reputation: 19073
At this point we need to get back to discussing Denver Real Estate and not the wide variety of nearly unlimited factors that could impact local real estate matters.

Thank you.
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Old 04-13-2017, 09:15 PM
 
3,276 posts, read 1,481,366 times
Reputation: 2458
Quote:
Originally Posted by SkyDog77 View Post
You went in to the derivative rant last time we had this discussion. Last time you were saying it was credit default swaps on automotive loans that would wreck the economy. Could happen. Maybe. I hope we're smarter this time around.

It is clear that they were the nitroglycerin last time around, but what I don't understand is how you think they relate to an oil spike.

With the newer fracking technology, oil reserves are plentiful and cheap to access. It very unlikely that Oil would stay above $100 a barrel for any extended time period. Renewables are also easing some of the demand strain and will continue to grow.
There are many asset classes under pressure. It's not a rant if it's the truth. It's just pointing out potential risk that will likely be realized at a greater magnitude so long as the current situation exists.

Like I said, I can't predict the future and only used an oil spike as an example. I think people should at least be aware of what could happen and what did happen prior to making a significant investment for a duration of 30 years.

30 years is a long time in a rapidly changing economy where automation is in the beginning stages of perhaps, becoming much more prevalent. It's not just one angle that the attack is coming from, it's multiple areas where you should consider being defensive. I just want people to be able to rationalize where the economy is now and where it could be going.
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Old 04-13-2017, 09:16 PM
 
3,276 posts, read 1,481,366 times
Reputation: 2458
Quote:
Originally Posted by Mike from back east View Post
At this point we need to get back to discussing Denver Real Estate and not the wide variety of nearly unlimited factors that could impact local real estate matters.

Thank you.
I posted my last response prior to reading yours. I will refrain from posting on this subject in the future.
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Old 04-16-2017, 09:16 AM
 
Location: The Berk in Denver, CO USA
13,947 posts, read 20,190,335 times
Reputation: 22564
Default Denver, northern Front Range real estate party ends in late 2019, new forecast predicts

Denver, northern Front Range real estate party ends in late 2019, new forecast predicts
Denver, northern Front Range real estate party ends in late 2019, new forecast predicts – The Denver Post

"But Location Inc., a geographic research and real estate data firm, warns that years of rapid appreciation will shift into a stretch of falling prices starting in late 2019. More specifically, the forecast says, median home prices will fall by more than 20 percent during the following few years, due in large part to a growing gap in wages and home prices."

I plan to call BS on this in 3 years.
5 year predictions for micro markets?
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Old 04-17-2017, 09:08 PM
 
Location: Arvada, CO
13,227 posts, read 24,316,643 times
Reputation: 12943
Quote:
Originally Posted by davebarnes View Post
I plan to call BS on this in 3 years.
5 year predictions for micro markets?
Your Berk abode will be worth at least $899,999.

My place will be worth $475K.

Westwood and the Barnums will be completely turned out.

Denver proper will top 800K pop.

There will be new tracts in far east Aurora.

And everything will be just as it is now, only worse.
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Old 04-17-2017, 09:43 PM
 
Location: Colorado
722 posts, read 505,287 times
Reputation: 1043
Quote:
Originally Posted by davebarnes View Post
Denver, northern Front Range real estate party ends in late 2019, new forecast predicts
Denver, northern Front Range real estate party ends in late 2019, new forecast predicts – The Denver Post




5 year predictions for micro markets?
I think we will see a lot more home development between Denver and CoS for those hoping to get better housing costs while having to work in Denver. It's already starting to fill in pretty quickly! Just thinking of even more congested traffic between that stretch gives me a massive headache. Thank goodness that isn't my commute!
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Old 04-21-2017, 05:59 PM
 
Location: Denver
3,179 posts, read 2,619,490 times
Reputation: 2201
Quote:
Originally Posted by DoodlemomCoS View Post
I think we will see a lot more home development between Denver and CoS for those hoping to get better housing costs while having to work in Denver. It's already starting to fill in pretty quickly! Just thinking of even more congested traffic between that stretch gives me a massive headache. Thank goodness that isn't my commute!
I think parts of the I25 corridor are specifically zoned for no building to keep it pretty.
Quote:
Originally Posted by davebarnes View Post
Denver, northern Front Range real estate party ends in late 2019, new forecast predicts
Denver, northern Front Range real estate party ends in late 2019, new forecast predicts – The Denver Post

"But Location Inc., a geographic research and real estate data firm, warns that years of rapid appreciation will shift into a stretch of falling prices starting in late 2019. More specifically, the forecast says, median home prices will fall by more than 20 percent during the following few years, due in large part to a growing gap in wages and home prices."

I plan to call BS on this in 3 years.
5 year predictions for micro markets?
The wildcards are inflation and the Fed, but I'd say that their macro trend predication matches my best guess.

Prices are going to increase till inventory rises. Inventory will rise as demand tapers off. Demand has already begun to taper off and will continue to taper off as prices inch higher and higher mortgage rates really start to hurt the bottom line. Construction will lag demand, and the building will continue even after inventories rise. Prices will fall some. Inflation will rise a decent amount. By the early 2020's, inflation adjusted prices won't be 3-5% from where they are now.

That's my $.10 analysis.
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