In my previous blog we visited Ben Stein and why he doesn’t think there will be a recession in 2008. Well, this is an article about a well known economist who does think there will be a recession and even says that we will see a 35% drop in the real estate prices in Florida, California and Las Vegas.
As you know, I don’t buy into predictions of the future, though I do believe the economy is not nearly as weak as people are being led to believe.
I do think a 35% drop is not in the cards – but then again, I have no idea and it is a possibility.
Over the past several years (at least up until the end of 2006) I had many people come through my office and enlighten me about real estate – it can’t ever go down.
My response was that real estate can go down, it has gone down before, and it will go down again – many didn’t believe me. I told people not to buy unless they had a long horizon, at least ten years – some didn’t take my advice and they are hurting. Real estate over the long run will probably go up, historically it has and I like Real estate as an asset class and as an investment – but it has to make sense. Much of what people where buying didn’t make any sense at all and a lot of people are paying the price today.
My point – interesting article, though I don’t put the odds very high of Robert Shiller being right…..I pray to God he isn’t.
Scott Dauenhauer, CFP, MSFP, AIF