The economy: all the warning lights are red and blinking.

Hey, we all have different outlooks on risk. Investing is a contact sport tho, and like any contact sport you will get injured at some point. Or another way to look at it, like life, you can lead a conservative life, not risk much, accumulate some decent returns and sit on the porch drinking a mint julip and watching the world go by. A little boring but safe.

Or you can party hard, try all sorts of different investments including some that can “kill” you, but are so damn sexy. Tesla, lol. However, you will inevitably end up in rehab. nothing wrong with door #1, I was in rehab in 2009 thru 2010 It wasn’t fun at all. I’m hoping to never go back. People say that You can’t lose with real estate, I say not true. thanks For the good convo.

I recommend you sit tight a little longer. You can’t win in a sellers market when fools are bidding prices up and overpaying. The Fed is going to have to create an increase in unemployment to restrain inflation. Unemployment is at 3.8% with inflation at a 40 year high But growth expectations for the economy are falling. How can this be? The Fed is going to war on inflation by raising rates and creating higher unemployment = recession. when unemployment gets to a more “normal“ level, ~6% we will see mortgage delinquencies as people are unable to make their mortgage payments.

keep an eye on for sale signs in your desired area and note how long properties hang around before the termite tent goes up, and also how many are available for sale. By summer we should be seeing more properties for sale. only three times in history has the Fed moved up rates and not created a recession. Last time was 1994. i forget the others 1965 or around there.

The covid phenomenon was very interesting. Consumers working from home decided they needed a bigger home and drove prices up, at the same time the Fed drove mortgage rates to just about 1.75% AND went on a mortgage buying spree. basically every loan a lender funded was purchased at a premium from them. If a lender funded a mortgage for $100,000 the government bought it for $104,000. A 4% GOS (gain on sale). how inspired were lenders to make as many loans as possible when they had a risk free profitable exit? Lenders funded trillions and made huge profits. Now the flip side is here, no more Fed purchases of mortgage backed securities, GOS are down to about 105 bps. Lenders can’t stay in business with a margin like that. The loosely run mortgage ships are already announcing layoffs. a big lender UWM announced this week that they will be introducing new loan programs that don’t require verification of income. They have a new name for subprime. Non QM. But it’s subprime underwriting. All in a desperate move to maintain loan Production volumes. mortgage rates are flirting with 5% at the moment. I don’t see that 20% appreciation now given where rates are going and the Feds determined approach to combat inflation. I haven’t purchased a property in almost 2 years. and my bird dogs and I look for bargain properties every single day. Just hard to find solid deals right now. I saw this in 1991 and in 2008. builders are going balls to the walls with projects right now, the market is going to change on them by the time they complete the builds. Builders are worried .

crashes begin suddenly, capital markets lock up and then we begin the death spiral. crashes begin suddenly but they stay for years. We began the last one in 2008-2009 and it stuck until about 2015, now we have been “frothy” for about 2 years. But let’s not count out government interference and subsidies as the taxpayers wallet is always handy.