The global recession
Everything is deteriorating. The stock exchanges that we thought would be down for a couple of months before they drag themselves back onto their feet, have stayed down. For some reason nothing induces them to get going again. The housing market is a disaster, the auto industry is dead and refuses to lie down, and the terrible financial disease is spreading around the world like a wildfire out of control.
The horror stories
The horror stories are starting to emerge. This guy worked his whole life and paid his insurance and pension premiums every month, even in the months when he had to scrape the money together. Now aged 68, he’s still here but the insurance and pension company has disappeared. Immigrants who arrived from other countries in mid-life are destitute and are begging on the streets. A guy loses his great job at a hi-tech company, defaults on a couple of mortgage payments while he is racing around the country looking for something else, and his house is repossessed.
Are you running to the California Gold Rush?
But not all is darkness. There is always someone who profits in the worst of times. The price of houses is down and down and down. The good news? Why, there’s a special on houses in California, a silver lining in the Golden State’s epic housing crash.
In the midst of this crash, plummeting prices and near record-low interest rates make it possible for young couples to own a home in California for the first time.
California’s boom-and-bust real estate
Investors and real estate speculators are snapping up foreclosed properties on the cheap while hoping to sell during the next upswing in California’s boom-and-bust real estate cycle, a boom they believe is inevitable and possibly not far off.
The world’s eighth-largest economy?
California, which would be the world’s eighth-largest economy if it were a country, experienced a near-doubling in home sales in the fourth quarter, a pace surpassed in the United States only by Nevada.
Be careful
Experts warn that playing this game can be dangerous. No one is really sure how low home prices will go or when they will rebound. To complicate matters, Californians are pouring out of the state in search of better prospects.
This level of home pricing cannot be permanent because it costs too much to build a home in California. You can buy a finished house for $55,000. So people are grabbing them, hoping to make a killing when the recession is over and they can sell at high prices.
Experts agree that California home prices will rebound, but caution that real estate investing in this economy should not be undertaken by the faint of heart. No one knows how and when this downturn is going to end. This cycle is so different from all prior cycles that it’s impossible to extrapolate.
California history
California’s roller-coaster real estate cycles go back to the 1970s, when home prices tripled, can you believe it? If you’re very strong-hearted and willing to take a phenomenal risk that could pay out phenomenal dividends (or not), now is the time to purchase real estate in California.
Every cloud has it’s silver lining, good luck to the new couples or singles who have a good income, low debt, good credit and are in a position to take advantage of the current situation in California.
Just like stocks, houses are best bought low and sold high. Those who can get the financing would do well to invest in a fixer-upper in the near future, and then sell it in a year or two for a profit when the market returned to normal.