Sunday, July 23, 2006

Real Estate Market

I recently finished the book, Trump Strategies for Real Estate: Billionaire Lessons for the Small Investor. One thing I thought was particularly timely was a small section in the last three pages of the book. Under a section titled Exit Strategies the authors suggest selling a property when 1) interest rates are low but indications are they are going up; 2) stock market and bond market show low returns; 3) dollar sinks against foreign currencies; 4) inflation rate increases.

Interest rates have been climbing for a while now. Recently the stock market has reversed gains from earlier this year. The dollar has definitely been sinking in the currency markets. Inflation has been moving up largely due to oil prices (IMHO anyway). Now not all of these changes have lined perfectly, but it does make one wonder is now the prime time to sell real estate. Have rates perhaps gotten "too high" already and we are off peak prices. Interest rates seem high compared to the last few years, but they are still a little low in historic terms.

So this leaves the potential investor wondering if it is a good time to sell, or if we are sliding into a good time to buy. The prime question is do you think interest rates have peaked for this economic cycle. Secondary question, is whether inflation is under control or just about to pick up?
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