real estate

Fantasy Prices For Real Estate

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(author note: If you have not read the original article (link below), I suggest you do so before reading this one)

From “How Much Is Your House Worth Today? Another Crisis Brewing?” …

"Maybe it is time to sell the ‘investment’. After all, it has been more than ten years since our investor broke ground on his personal gold mine. But, after speaking with the realtor, our investor is even more discouraged.

Apparently, a reasonable asking price is somewhere in the neighborhood of $690,000.00 – $700,000.00.  That is considerably less than the purchase price of $1.1 million. And it is also less than what is still owed – $850,000.00. Which means it will have to be a short sale – if the bank will agree.

After some negotiation, the bank agrees to a conditional listing at $749,900.00.

Exactly two months later, the asking price is reduced to $699,000.00. And a short two weeks after that, it is reduced again – to $649,000.00.

Ten long weeks later, an offer is tendered. The offered price is $550,000.00. It is quickly turned down by the bank. The listing is removed."

Now for an update. Five months after removing the listing, our investor decided to try again. The house was relisted in July 2018. The listing price of $749,900.00 was identical to the original listing price in August 2017. 

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Need A Second Opinion?

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DO YOU NEED A SECOND OPINION?

Let’s face it. No one plans financially for disaster. We assume that if we are conscientious, persistent, and long-term oriented, that our plans –  generally speaking – will find fruition.

We carry insurance to protect ourselves against financial loss from events such as death,  major illness, disability, property damage, long-term care, etc.

But what about systemic risk?

How will you survive a complete credit collapse and loss of 50-90 percent of the value of all assets denominated in U.S. dollars? What about a full-scale depression?

When most advisors talk about investing in such a way as to minimize risk and avoid market blowouts, there is an implicit assumption that whatever the situation, it will be temporary; that the financial markets will continue to function.

Maybe that isn’t the case. Wide-scale bankruptcies, bank failures, and interruptions in communication channels could effectively stop markets from functioning at all.

Suppose you have an investment that generates huge profits for you during a stock market collapse; say a short position on some individual stocks or an ETF with a similar strategy.

Because of the leverage involved, if a market decline is steep enough and swift enough, there may not be any traders or other investors with money to whom you can sell your profitable ETFs or from whom you can buy back your existing short positions.

What if the U.S. dollar renews its long-term decline in accelerated fashion? Is runaway inflation a possibility and how would you be affected?

Do you understand the concept of fractional-reserve banking and the danger it presents?

Maybe you don’t own stocks. You might own bonds which provide you with interest income. Or real estate; or gold. Extreme negative market conditions will affect all of these things in ways you probably cannot imagine.

If you are worried or concerned about any of  these things, or just feel the need to be better informed, you could benefit from a personal consultation.

Or, perhaps you are a corporate officer who has employees that would gain from a better understanding of these issues.

Whatever your particular situation, take action today. Send me an email with your concerns and questions. I will get back to you quickly.

Let’s talk…  kwilliams@kelseywilliamsgold.com

Bio: KelseyWilliams

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

 

Federal Reserve And Market Risk

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FEDERAL RESERVE AND MARKET RISK

Analysis and opinions of the financial markets vary depending on who is doing the analyzing. The most critical element that affects the song is the singer.

There is nothing wrong with that. But we should be aware that our own prejudice clouds our perspective. However, there is more that is not so obvious. With that in mind, lets take a look at things.

Today, more than ever before (at least it seems that way), focus is on the Federal Reserve. Even economists and the general public have joined the throngs of interested observers.

Stocks and bonds fell significantly over the past several days, partly in response to statements by Chairman Powell. The Chairman’s remarks indicated the intention of the Fed to continue its push to raise interest rates more aggressively, and without seeming regard to any deleterious effects on the economy and the stock market.

So, we hear criticism that the Fed is guilty of policy error. “The Fed needs to be more accommodative at this time.” Maybe; maybe not.

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