Jeff, a long time reader, emailed me at my old dbreakfast account a few weeks ago. I rarely check that account anymore so I almost deleted all the spam and his email along with it when I saw it. Jeff wanted to know what my take was on Gold and Real Estate market. I gave my forecast for Gold this week in my members section so I won’t go into details here but I will comment on the RE market.
My take on the RE market is that we’ll see some stability by Spring 2008 only if the Fed cuts another 25 bps. My models indicate that the magic yield threshold on the 10 Year is 4.5%, anything higher than that and we’ll risk further RE market deterioration and recession. Anything below that yield and we should see stability. Of course the Fed doesn’t want to repeat the “bubble years” again so any future rate cut will be the equivalent of a drawn out root canal for the Fed. I’m expecting a RE bottom by the end of next year only if the economic stars align just right! :)
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