Macro Economics

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How is this Real Estate Cycle different from the last?

Trying to use the last real estate cycle as your playbook could be problematic. Thru hitting the proper benchmarks in a real estate cycle you can create real wealth. You buy from pessimists and sell to optimists.

“Games are won by players who focus on the playing field—not by those whose eyes are glued to the scoreboard. If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so.” — Warren Buffett, billionaire investor

For the first 144 years of real estate enclosure in the U.S., land sales and/or real estate construction peaked almost consistently, every 18 years,” Anderson writes. “The world’s worst downturns are always preceded by land speculation (the chasing of the economic rent) fueled by misguided credit creation courtesy of the banks.

2002 thru 2004 (mid 2004) was a demand driven boom. That diverged into a mania of historical proportions. The leverage of late 2004 thru 2006 is what create a surge in pricing and the accompanying correction. For every action there is an equal and opposite reaction.

What is a mania? An economic bubble or asset bubble (sometimes also referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania, or a balloon) is trade in an asset at a price or price range that strongly exceeds the asset’s intrinsic value.It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future. Asset bubbles date back as far as the 1600s and are now widely regarded as a recurrent feature of modern economic history.Historically, the Dutch Golden Age’s Tulipomania (in the mid-1630s) is often considered the first recorded economic bubble.

History shows unsustainable debt levels create corrections.

So how is this cycle different?

Well the money supply has changed a little (that is the understatement of the year).

Real Estate Cycle

Let’s look at total consumer debt:

Real Estate Cycle

Let’s look at the growth of commercial loan debt:

Real Estate Cycle

Let’s look at debt on Multifamily:

Real Estate Cycle

Let’s look at car loan debt:

Real Estate Cycle

How about residential debt levels?

Real Estate Cycle

The only debt level that has not pierced the pre-2008 levels in residential debt.

What does this mean?

 

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May 2017 Lee County Fl Foreclosure Trend Report

Your monthly  Lee County Fl Foreclosure Trend  Report!

Complied and analyzed by  Jeff Tumbarello, Director

Lee County Fl Foreclosure Trend Report at a glance:

Lis Pendens:
May 2017: 92 Mortgage related Lis Pendens.
April 2017: 80 Mortgage related Lis Pendens.
May 2017: 131 Mortgage related Lis Pendens.

Lee County Fl Foreclosure Trend Report Lee County Fl Foreclosure Trend Report Lee County Fl Foreclosure Trend Report

 

Certificates of Title:
May 2017: 79 Certificates of Title were conveyed.
April 2017: 53 Certificates of Title were conveyed.
May 2017: 87 Certificates of Title were conveyed.

Notes:

More of the same…

The top ten Lis Pendens filers represent 55percent of the filings.

WELLS FARGO BANK NA was number 1 in filings.

The current trend of the distressed market NOT being a primary (last cycle) driver will continue.

Bertrand versus US bank still has not caused a significant increase in filings.


SWFL REIA MONTHLY LUNCHEONS

When: 6/7/17

Topic:  Medical Marijuana and Real Estate.

Click here for more information


SWFL REIA General Meeting

Wednesday 6/21/2017

Topic: Mid Year Market Update.

Click here for more information


The SWFL REIA is the premier source for Real Estate Investing education and networking.

The SWFL REIA is different in the Real Estate Investing world in that we do not do information product sales. Our content rich meetings focus on Real Estate Investing via collaboration with like-minded Real Estate Investors sharing their own experiences.

The SWFL REIA is on the cutting edge of data gathering and analysis of the housing market and foreclosures. Our Analysis and Trend reporting has made the SWFL REIA an expert source for the media and set standards by which the housing market is analyzed and trended within the industry.

Our members are Real Estate Investors, Real Estate Agents, Title Agents, Insurance Agents, Landlords, Property Managers, Wholesalers, Rehabbers, Note Buyers, Hedge Fund Managers, Bulk Asset Purchasers, Foreclosure and Probate Investors. Come and network!

Our Motto: Knowledge withheld is Knowledge wasted.

The number one key to being successful in real estate investing is?

To understand what you are there to do!

From our experience, this is the most critical phase.  If you have a clear plan it is easier to deploy capital while still operating within a margin of safety.

The SWFL REIA is the premier place to understand what you are here to do, in relation to real estate investing! We look forward to meeting you at a meeting soon!

Click here for membership information

Get our meeting notices and market data like the April 2017 Lee County Fl Foreclosure Trend Report emailed to you.

Click here for membership information

Get our meeting notices and market data like the April 2017 Lee County Fl Foreclosure Trend Report emailed to you.




Mortgage interest rates forecast 2016

One of the things I track is larger monetary policy and how it relates to the economy. This drives real estate, as well as many other things. This includes mortgage interest rates forecast 2016. In the course of my once a quarter update (disclosure, my work, done for me and my uses. Then shared to all who might find value. PS please share any and all corrections/additions/thoughts. That is how we all learn). I came upon a few things that prompted my to do this Mortgage interest rates forecast 2016.

There are many sources with predictions as to Mortgage interest rates forecast 2016.

One of things that jumped to my attention was the amount of Treasuries on the Federal Reserves Balance sheet.

Mortgage interest rates forecast 2016

mortgage interest rates forecast 2016

As of the August 2016 Quarterly Report on Federal Reserve Balance Sheet Developments. The Federal Reserve bank is holding 2.4 Trillion (with a T!) of Treasures. It holds 4.2 Trillion Dollars worth of securities. These Treasuries are held at today’s artificially low interest rates. Due to this exposure. I doubt they can substantively raise rates in the near to medium term due to the effects on their own balance sheet.

United States Fed Funds Rate  Forecast 2016-2020

Interest Rate in the United States is expected to be 0.75 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in the United States to stand at 0.75 in 12 months time. In the long-term, the United States Fed Funds Rate is projected to trend around 2.25 percent in 2020, according to our econometric models.

While the Fed Fund rate is not exactly the Mortgage Rates. Mortgage rates are dictated mostly by market movements, but the Fed can have a huge influence on rates.

Even though the federal funds rate is not tied to mortgage rates, it affects them indirectly because it impacts lenders’ borrowing costs. It is also important to know that Treasury yields only affect fixed-rated mortgages. The 10-year note affects 15-year conventional loans while the 30-year bond affects 30-year loans. So there is no easy answer. The bigger picture appears they can not significantly raise rates in the near and medium term.

It appears that we have a clear argument as to why the Federal Reserve Bank can not raise interest rates. I will leave the following quotes for historical perspective.

“Prediction is very difficult, especially if it’s about the future.”

–Nils Bohr, Nobel laureate in Physics

“Some things are so unexpected that no one is prepared for them. “

–Leo Rosten in Rome Wasn’t Burned in a Day

“Forecasting is the art of saying what will happen, and then explaining why it didn’t! “

–Anonymous

The SWFL REIA is the premier source for Real Estate Investing education and networking.

The SWFL REIA is different in the Real Estate Investing world in that we do not do information product sales. Our content rich meetings focus on Real Estate Investing via collaboration with like-minded Real Estate Investors sharing their own experiences.

The SWFL REIA is on the cutting edge of data gathering and analysis of the housing market and foreclosures. Our Analysis and Trend reporting has made the SWFL REIA an expert source for the media and set standards by which the housing market is analyzed and trended within the industry.

Our members are Real Estate Investors, Real Estate Agents, Title Agents, Insurance Agents, Landlords, Property Managers, Wholesalers, Rehabbers, Note Buyers, Hedge Fund Managers, Bulk Asset Purchasers, Foreclosure and Probate Investors. Come and network!

Our Motto: Knowledge withheld is Knowledge wasted.

The number one key to being successful in real estate investing is?

To understand what you are there to do!

From our experience, this is the most critical phase.  If you have a clear plan it is easier to deploy capital while still operating within a margin of safety.

The SWFL REIA is the premier place to understand what you are here to do, in relation to real estate investing! We look forward to meeting you at a meeting soon!

Click here for membership information

 

 

 

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