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Minyan Mailbag - Real Estate

By

Nervouis Nellie!

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Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.

Great column this morning Toddo. On another note, I am wondering about these real estate prices and when (if) they will come down as I am renting and have been for a while (I think you still do also). If interest rates continue to stay low do you think that prices will still come down? Mortgage rates haven't really moved much even with the fed raising.

By the way I can't wait for MIM2. I tore my ACL last year around that time and missed out. Thanks for your feedback.

Minyan Jason

MJ,

Thanks kindly for the snaps. I don't think that there is a blanket answer to this question as it's a function of demographics. I clearly believe that there is a real estate bubble but it'll impact different regions in different ways. It's "Uber-American" to own a home, as evidenced by the fact that home ownership levels are at all-time highs (partially due to rates, partially due to debt). That isn't a bad thing, of course, unless the reliance on ARMs flips the switch and turns the benefit into a liability. When that happens, the ripples will have profound impact on consumers and, in turn, the economy.

My sense is that the first "tier" to tumble will be high end markets and the speculative arena. We've seen some of this occur in areas like San Diego but it's been more the exception than the rule. I will offer that the "home flipping" in places like Arizona reeks with red flags and I have a hard time seeing that end well. There seems to be an imbedded belief that "tangible properties" will retain their value and there will always be another buyer waiting in the wings. It's not unlike the internet craze of the late nineties with real estate licenses acting as modern day eyeballs.

You are correct in your assumption that I rent an apartment in New York City. I refuse to pony up to the table as a function of my big picture beliefs. That hasn't been a bad thing unless you look at the opportunity cost of what could have been (and assuming that I timed the buy and, more importantly, the sale of property). I understand that many Minyans aren't afforded the luxury of this decision making process but I will always share my process with hopes that it adds to yours. The next few years promise to be very interesting and it is our goal at Minyanville to find our way through the fray.

See you in Crested Butte!

Toddo


R.P.

No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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