My brother Bob, the portfolio manager, wrote the following to me the other day after a triple-digit rise in the Dow Jones Industrials: "OK, now I'm at least unlocking the door of the doom bunker, so I can be ready to dash in."
I asked him to hold the door for me. This current stock market is defying the laws of gravity in an environment of massive national debt, double-digit unemployment and a housing market that, despite what the National Association of Realtors tries to tell us, will stumble around for at least a few more years.
I am not an investment expert, nor do I play one at this blog site. But I do have some skin in the game. This stock market is
I also don't feel any strong optimism about the housing market in the near term. There are just too many foreclosures on the horizon and not nearly enough new employment prospects. But for those who have deferred their dreams of moving to that golf course home (or any place in the southern U.S.), now may be a good time to relocate, assuming you are above water in your current home. Moving now could actually be a hedge against any badness that ensues.
My wife and I, for example, are going to sell our primary home in Connecticut in 2011 or early 2012, a year after our daughter
We bought our Connecticut house in the early ‘90s and saw its value increase steadily until 2006. We didn't use the cash in the house as an ATM; we took out a home equity loan along the way, but paid it off in just a couple of years. Like many Americans who bought their homes pre-2000, we are ahead of the game, with some equity to put to work in our next home.
We also know that our house is worth what someone will pay for it, not what the Joneses two doors away got for their house in 2007. (We really do have neighbors named Jones, but we do not try to keep up with them.) If the average of three appraisals we get on our house comes in at ‘X,' we will expect to get ‘X' as the selling price, no more and, we hope, no less. As in the stock market, pigs get slaughtered in the housing market.
It may not seem like much, but the government would give us a $6,500 tax credit if we bought a new primary home before
Also, for those who have good credit ratings and a desire to finance some portion of their dream home, mortgage rates are still as low as 5%, assuming a 20% down payment. We don't plan to add any debt to our portfolio, but for others, low rates could spell the difference between their dream home or nothing.
We have a place in South Carolina already, but we plan to live in a city as well. We are going to rent a city apartment for a while, confirm that we like whatever neighborhood we choose, and keep an eye on real estate prices. If we see a bargain, we will buy it. That same approach will work for many people considering a home in a golf community or in any neighborhood in a golf rich area. Some homeowners in southern communities are now desperate enough that they are willing to take the monthly cash flow from a low rent in lieu of a ridiculously low sale price (or foreclosure).
Most of us entering our leisure years are going to downsize our living space. All things being equal, that means our next
And that can certainly help you keep up with the Joneses.
If you are contemplating a move to a golf rich area and want some ideas or a referral to a highly qualified real estate professional, contact me and I will respond promptly.
Those moving from many areas in the north to southern communities, like Belfair in Bluffton, SC, will save tens of thousands of dollars in cost of living expenses each year.