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Dropping hard as the gold price doubled and more since 2006, the average U.S. home is now priced at 103 ounces of gold, little more than one market-approved gold bar for settling a 100-ounce Comex gold futures contract.
In my opinion, now is the time to buy real estate if you can afford it. A combination of low house prices and cheap credit makes real estate look cheap. And, if you lock in a 15 or 30 year fixed interest mortgage, you have a pretty decent hedge against future inflation.
With incomes falling the only way to buy Real Estate is Cash. If the Tea Party succedes in destroying the economy there will be inflation, mortgages and taxes will go up. So before I would buy either I would ensure I had cash to live on if my income collapses. You can't eat gold or Real Estate.
In my opinion, now is the time to buy real estate if you can afford it. A combination of low house prices and cheap credit makes real estate look cheap. And, if you lock in a 15 or 30 year fixed interest mortgage, you have a pretty decent hedge against future inflation.
Nope, one should wait until interest rates are 10% or higher. Then prices will fall enough to make purchasing one (with cash) a wise decision. Houses priced in gold are between 60-90% lower from the peak, but still have much more to go.
If you're doing one of these scammy USDA loans with 0% down, go for it. You can always walk away.
Nope, one should wait until interest rates are 10% or higher. Then prices will fall enough to make purchasing one (with cash) a wise decision. Houses priced in gold are between 60-90% lower from the peak, but still have much more to go.
If you're doing one of these scammy USDA loans with 0% down, go for it. You can always walk away.
Bingo!
Yep, as long as interest rates are so low, people can still justify spending stupid amounts of money on a home because the low interest allows them to achieve a loan outside of their viable income range.
As interest goes up, people will not be able to afford a loan for the value of these homes and this will force home prices to plummet to reach reasonable levels to which people can afford the loan.
My mother bought a house 35 years ago for 50k and had an 18% interest loan.
There is no way people could afford a home of the prices we see today if the interest rates shot up to those levels.
For example, some of these homes people are saying are "good deals" are running still around 300-400k. A 300k home at 18% interest for a 30 year fixed is around 4400 a month, which means just to pay for the loan (no insurance, no property taxes, food, gas, etc...) it would cost around 53k a year (meaning for a viable income ratio, the buyer would need to pull in 159k a year to meet traditional loan requirements). At 10% that payment drops to around 2500 a month and 30k a year (90k a year loan requirements).
As you can see, with the median income being as it is, over 50% would not even qualify for any of those loans as their income is not sufficient to afford them (not to mention even many in the top 50% would not be able to afford the costs of many homes we still see overpriced now). Interest rates are the end game equalizer for an irresponsible public. What should have been responsible buying by the consumer (not paying stupid prices for a home even if you could afford a loan for it) will result in a hard reality to which interest rates will make abundantly clear.
Houses need to come down quite a bit in many areas to even remotely be "worth" the purchase. Everyone who rushes out and buys these overpriced homes now thinking they will be well off due to the low interest rates will be the same ones trying to dump the homes (like those now due to loss in home value) when their values plummet as interest rates rise.
hah. what a fool. it's pretty bad if the only way to make housing look like an attractive investment is to price it in terms of gold during a surge in gold prices.
if people got paid in gold, maybe he'd have a point... but we don't, so he doesn't.
Do you trust the intrinsic value of a precious metal that has been used as a store of value and money longer than England has been in existence less than the leadership abilities of Tim Geithner, Barack Obama and Ben Bernanke?
If the market steadies itself, we should expect to see another housing crash in the next few years. Home prices are still 15-20% overvalued beyond the 30 year historical growth in terms of GDP. There are a few markets where a person could do well buying (I almost bought property in florida a few months ago...amazing opportunities!), but there are other areas that are still overvalued.
That being said, do NOT buy gold now. It is not going to rise significantly...
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