- May 25, 2002
- Professional Status
- Certified Residential Appraiser
"I always felt very secure and very safe with real estate. Real estate always appreciates." ~ Ivana Trump
Before we begin our next hair-raiser, I notice a lot of people scratching their heads as global stock markets decline in the face of a "strong global economy." What you are seeing is the "pricing in" of approximately $2 trillion of lost homeowner equity in the U.S. (soon to be $3 trillion, then $4 trillion and so on). And it's only a matter of time before that equity squeeze wreaks havoc across the economic board and takes down the stock market and commodities, too. Picture a five year old trying to beat back an elephant with a Wiffle bat -- eventually that will be the metaphor for a declining global economy trying to chase from the living room the growing, immovable force that is asset deflation.
Meanwhile, sell your real estate now. Sell it now. Now. Get rid of it. All of it. Even if you can't get 2005 prices (and you won't). Get what you can now, set the money safely aside and buy the property back (or one like it) several years from now, for a lot less money.
You might make a case to retain your personal residence, particularly if you bought it prior to 2002 and/or have a very large equity (60% or more). You need to live somewhere, and that stability (and home ownership) can be worth more than money. But whatever equity you can pull out of any other property now will pay greater dividends later on, when the mother of all credit/liquidity crunches -- continuing to unfold right before our very eyes -- makes safe cash King in a way few of us can fathom right now.