Aftershock: Protect Yourself and Profit In The Next Global Financial Meltdown, Second Edition

Rule Number Two: Stay Away from Real Estate Until After the Dollar Bubble Pops

Unless you find an exceptional bargain that you can realistically flip fairly quickly to a ready and qualified buyer, investing in real estate is not a good idea until after the dollar and all the other bubbles burst. Despite what the cheerleaders want you to believe, real estate prices have not hit bottom. All real estate now is basking in the glow of ultra-low mortgage rates, which won’t last indefinitely.

As inflation and interest rates rise (see Chapter 3), mortgage rates will rise, too, shrinking the already small pool of able buyers even smaller and growing the already large pool of real estate inventory even larger—further driving down prices. As inflation and interest rates go up and eventually the dollar bubble falls (see Chapter 4), the overall economy will sink and unemployment will rise, pushing real estate prices even lower—much lower than most people can imagine today. As much as rising interest rates will harm the stock market, they will be even more toxic to the real estate market because high interest rate mortgages and tough credit requirements will put home buying out of reach for most Americans.

So any rah-rah advice you get about grabbing cheap real estate now before home values go back up is just plain wrong. Stay away from real estate! Do not be tempted by past profits you may have made or wish you had made. Now is not the time. Rest assured there will plenty of real real estate ...