Based on my 46-year career in real estate, my mantra is “Never Bet Against The Fed”. The power of The Fed is currently being illustrated by the fact that by raising interest rates too quickly The Fed has managed to neutralize the very powerful economic stimulus of the 2017 Tax Act.
I am tired of saying and you are tired of reading, but it is a fact:
- In the economic history of this world, no single country (much less the world) has ever successfully withdrawn the funny money stimulus euphemistically called “Quantative Easing” without suffering rampant inflation followed by economic collapse. Zimbabwe (100% inflation per day) and Venezuela (current inflation rate of 1,000,000% annually) are just two recent examples. Someone should educate the Democrats.
The new home market is a significant economic leading indicator for a variety of excellent reasons. It is important that new home sales have been trending down for six months for several reasons but primarily because mortgage interest rates have increased faster than household income.
While I only have an MBA not a PhD, I am in the trench and the PhD’s at The Fed get paid nicely whether or not they cause a recession. The recession will occur in late 2019 or early 2020. Its severity is dependent on how quickly the PhD’s at The Fed realize that they have caused a recession. Sorry, it is that simple.
While this recession will be less severe than The Great Recession of 2008-2010 (also called the Great Financial Crisis or GFC), some folks will get hurt. Please do not be one of them.
Because land is the source of all wealth, a really good piece of land is the very best long-term asset one can hold in their portfolio.