Bill Bonner, the greatest writer I know personally, had this to say recently about the real estate market:
“America’s real estate bubble has created a whole nation of geniuses … people who think they are smart because their houses have gone up in price. And the smartest of them weren’t content to merely watch prices rise; they took advantage of them by leveraging themselves into more and more expensive properties. …
“There must be millions of real estate speculators, concentrated in the hot markets on both coasts, in similar situations. They’ve stretched to buy. Now they’re stretched to keep up with maintenance, taxes, condo fees, and interest payments. Their neighbors bite their tongues. ‘I told you so,’ they itch to say. “What can you do to protect yourself? If you have a house you don’t intend to hold for a long time, this may be your last chance to sell at near-peak prices. Otherwise, all you can do is to put your money where a U.S. housing collapse won’t hurt it.”
Longtime ETR readers don’t have to worry about what to do now. They have already sold their inflated properties. Or at least we hope they did. We’ve been suggesting they do so for 18 months at least – maybe longer.
I don’t think there’s much of a chance of selling at near-peak prices now. Properties are still being listed at peak or near-peak prices, but they are not selling. We predicted 15 percent declines for single-family homes, 30 percent for townhouses and 50 percent for condos. My guess is that prices have already tumbled about two-thirds of that -10 percent for single-family houses, 20 percent for townhouses, and 33 percent for condos.[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]