28 Mar 07 The American Dream Compounded

Reading all the news about the sub-prime mortgage shake down, I find myself asking if our media & relied upon experts truly believe that this is only a sub-prime mortgage problem. If so, I have to beg to differ. The problems within the mortgage industry start with sub-prime. These people were the most vulnerable entering into the legal agreements they signed, but there is a lot more of a story playing out I’m afraid:

-Rising inventories in the for sale category
-Falling median prices mean way larger price drops based on averages
-Tightened loan practices (ie. less people able to enter the market)
-The prices in hot markets make even the most successful young people unable to enter the market, at least for now
-The running of the bulls in the stock market

All of these factors spell bad things for the economy, and will likely create some significant buying opportunities down the road. I don’t remember if it was Peter Lynch or Warren Buffet that said “one makes money buying not selling,” but those with a strong cash position in the coming years are going to be able to make a very healthy run of their own. How amazing it is to watch the American Dream in action, a series of emotional overflows, greed, and then panic sales. I am wishing those that overwhelmed themselves with debt a lot of luck. And, if WellcomeMat can help you, get in touch.

For those of us doing our best to help sell/rent properties, I think focusing on liquidity will yield very good results. I got a lesson on this when my mom was working for Fannie Mae during the S&L crash.