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REAL ESTATE WOES

06/12/2008

 

This latest WSJ analysis of the real estate market throughout the United States meets the predictions that were made in this blog over six months ago.

The key elements of the article state:


· “In the next five years, U.S. banks will charge off a bad debt of $65,000,000,000 to $165,000,000,000.” (Yes, that is billions.)

· “Real Estate Lenders hoping for a spring sales season for their homes [were disappointed]… resulted in a selling season that has been a bust.”

·
“The rate of foreclosures of homeowners hit a record…Also, the rate at which they fell behind in their mortgage payments [is also at a record].”

Unfortunately, comparisons to the 1987 - 1992 real estate bust are starting to appear in the media. But I am not willing to be the bearer of such gloom and doom. Rather, I am here to tell you that we can hope for a rise to begin in 2009.

In the meanwhile, what is a real estate investor or homeowner to do?

· If you plan to sell a home, condo, or co-op in most parts of the United States, take it off the market. Wait until the market plays itself out for the next 12 months.

·
If you are a commercial tenant, wait another six months or more to renegotiate your terms with your landlord. Vacancy rates will spike towards the end of 2008, beginning in 2009.

·
If you are a landlord in one of the central business districts, sign up your tenants as quickly as you can. The next two years are going to be a very difficult ride for most people. It’s time to wake up and smell the roses. It’s time to prepare for the actuality of a continued weakening in real estate prices for the next one to two years.

Write to Ed Klein at info@Kleinsolomon.com.

Thank you. ---Edward E. Klein

 


 

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