The Death Of Real Estate

By Author: Augustus Snyder
Total Articles: 382
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Best selling author John Dent, who has designed a career of making long-term forecasts about the economy, is making bold predictions about the economy. Dent predicts that until 2020 the united states economy will struggle, and hard assets such as real estate will take a big hit. Dent says the economic climate will sag because of decreasing demand.

Lowering demand for products and services result from the age and size of the population. For example, grown ups in their 20’s buy vehicles and rent apartments. As they grow older, they've kids, buy houses, etc. There are predictable amounts of these items they'll buy, allowing economists like Mr. Dent to predict the volume of total demand on the economy.

Mr. Ding made these remarks at the Glazer Kennedy Superconference in Orlando Florida May 2.

Mr. Dent predicted that the total demand on real estate would be in a falling demand until approximately 2020. He suggested that home values will likely further escape as a result of the slipping demand.

Further complicating the problem are empty that lenders continue to be holding back in the market ...
... to prevent collapsing home prices. Mr. Ding predicts a surge home based foreclosures as a result of the challenging economic times in the future. Mr. Dent advised everyone to sell their real estate.

After the presentation, one of the other attendees asked me if I thought real estate was a bad investment. I told him that Mr. Dent was 2 important factors.

The first one is the fact that real estate is strongly marketplace dependent. We’ve seen exactly how strong the real estate marketplace has been in Oklahoma City during the last few years when compared with areas that had big problems with the percolate. Our prices didn’t go up that much, so they didn’t come down much either. In addition, our economy is very strong. It’s much stronger than a few markets like the rust belt. Even if the economy on a nationwide scale takes a hit, it’s unlikely Oklahoma’s will take as much of a hit.

The second factor is cash flow. If you are buying investment qualities for cash flow, exactly what matters most is the amount of rent you are able to charge and how much your expenses will be. If the value of the property drops, that may have simply no effect on the rental rate. As long while you aren’t planning to sell the property, the fact that the value has fallen will likely have no effect on your cash movement, and therefore return on investment from the property.

Besides, should you did sell your real estate, where would you put your money? Into bank CD’s that pay 2% or less? Into stocks or mutual funds that offer absolutely no security tied to a hard asset?

No thank you, Mr. Dent. I’ll hold onto my real estate for the time being.

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