Doug Casey's Thoughts On Real Estate
full article
Is now a good time to buy? Again, with the caveat that all markets are local, my general sense is that it’s too early, but maybe not by much

As a tangible, the price of your real estate is likely to rise in dollars’ terms, but only because the dollar is falling. However, the premium that our parents received as a result of the housing bubble will not rematerialize in our lifetimes. The overbuilding of the recent bubble years, coupled with fairly straightforward demographics related to the baby boom and bust – along with the inevitable return to sane, versus insane, lending standards – will conspire to keep the value of homes, regardless of their price in dollars, at or well below current levels for years and even decades to come.



Finally, one more reason why we may not have to wait overly long before real estate becomes at least a rational investment. And that reason is that there is a lot of money on the sidelines just now, both in the U.S. and abroad. Much of that money is in cash, and much is in bonds – a disaster in the making.

As interest rates start moving up, and the fiat currencies start to come down, investors will become fairly desperate to get out of bonds and into pretty much anything with a discernable heartbeat. Once housing prices have fallen by another 20%, 30%, real estate will be again considered a safe asset to own, and some percentage of money will certainly begin to flow back into it.

I agree with Doug's line of reasoning that cash will begin to look for investment alternatives to paper investments and into tangibles. But I think gold will be a bigger recipient of this move than residential real estate. Houses can't be hidden from the tax man, and gold doesn't require cash outflows for maintenance and insurance.