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November 28, 2018 | Housing Bubble Popping Again?

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

Home prices are precarious to a deflating debt cycle in the US, Canada, Austrailia, New Zealand, the UK, Hong Kong, Sweden, and…well pretty much everywhere that humans have used excessive debt to drive up realty prices far beyond income growth over the past decade.  See:  The U.S Housing Boom is Coming to an End, Starting in Dallas for some good stats and charts.

We have to live somewhere.  Homes that one can carry for the same or less than the price of rent can be great foundational assets to have.  But the goal should always be to get it paid for as soon as possible and to keep other carrying costs well below our means.

A paid for home or office with income generating units within it that help cover the owner’s carrying costs, even create net cash flow–even better.  But using debt to acquire real estate that makes us cash poor or cash-flow negative is generally a bad financial decision that usually ends in trauma.  To prosper from bursting asset bubbles, we need to have low or no leverage personally, with liquid cash and our buy list, and then patiently wait for prices to go on clearance sale.  They always do in the end.

As we’ve been tracking here at PeakProsperity.com, the housing market is starting to look quite ill. After the central bank-driven Grand Reflation following the Great Financial Crisis, home prices are now beginning to nose over from their new bubble-highs. Has the Housing Bust 2.0 begun? If so, how bad could things get? And what steps should those looking to pick up values at much lower prices in the future be taking?

This week we talk with citizen journalist Ben Jones, property manager and publisher of TheHousingBubbleBlog — where he tracks the latest headlines and developments in the housing market. And given the stream of data Ben sees every day, he’s extremely pessimistic on home prices in most major markets worldwide. Here is a direct video link.

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November 28th, 2018

Posted In: Juggling Dynamite

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