Sunday, August 27, 2006

The Bursting of a Bubble

There is currently a lot of doom and gloom about the real estate market. I fully expect that there will be a decline of real estate. However, the real story is how it will affect each of us individually.

Here's how I rank the levels of impact:

  1. Very Worst - Own real estate with a adjustable mortgage you can barely afford and there will be an upward adjustment soon.
  2. Painful - Will need to sell real estate within the next two years and want to get a last year's price
  3. Ok with some risk - Have an affordable or no mortgage and plan to keep the property for 10 years.
  4. Sitting Pretty - Currently renting and have savings to invest in real estate or to buy a house.

Bottom line, situation 1 and 2 will be troublesome. Hopefully, some of these folks have some savings to mitigate the price decline. Situation 3 is not too bad if you weren't using your house as retirement savings since 10 years may not sufficient for recovery. Situation 4 may be a once in a life time opportunity to get the most real estate for the money. There are already numerous stories of people getting real estate for 50-80% of the original asking price.

I am in situation 3 with the possibility of going to situation 2. Ouch!

This is not financial or real estate advice. Please consult a professional advisor.

Copyright © 2006 Achievement Catalyst, LLC

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