Lots of people are making big bets, even betting with borrowed money at risk to their personal credit report (e.g. taking out a home loan on investment properties), on the long term direction of the real estate market. Real estate is always influenced by local trends, but on a macro scale, the pro-appreciation arguments are getting pretty thin considering we’re still on the down side of the real estate bubble and we’re no where near to reverting to the house appreciation historical mean.
As many non-mainstream financial analysts have said over and over, nothing has changed in the American economy, and in fact, the macro fundamentals have actually gotten worse where the only real beacon of positivity is the Federal Reserve printing borrowed money.
This thesis is further backed up by a 30 year long bond bull, one Gary Shilling, who believes the long bond could eventually hit the 3.0% mark (currently at 3.9%) and, very sensibly, believes national real estate values still has to fall an additional 20% decline over the next few years due to high unemployment, the backlog of unsold homes, and the difficulties surrounding the fraudclosure fiasco (e.g. fraudulent activities by the Too Big To Fail banks).
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