Here' we are in Aug 2022 and the circus goes on. Congress just passed the clubbing baby seals act. Well, they didn't actually call it that but its just as fitting as the inflation reduction act. Neither name has anything to do with what's in it. Spend more, get more taxes is the anthem. I'm not trying to get political here but the policies that we're dealing with have a direct impact on the economy and the real estate market. The costs will out weigh the new taxes that are squeezed out of the middle class. Inflation will continue to rise with the policies.
The federal deficit is a run away train. It's so bad that no one wants to talk about it. Trump was able to get the deficit to hold steady for a short term when we were firing on all cylinders, but then covid we released on the world and we printed an addtional 4 trillion. Game over! I'd like to have a discussion of how this plays out. Do we default on China and tell them to kick rocks? How will this cookie crumble? Right now we're doggie paddling and hoping for the best. Biden already raised the debt ceiling once and next year will need to do so again. We're approximately at 125% debt to GDP. It's a house of cards! We're not alone though, other countries are in similar positions.
I wonder if the problem is even worth pondering. Even if there was a way to correct our direction, will we choose the right path. Seems to me it comes down to the haves and have nots. Life's not fair, buy a helmet.
Switching to real estate now, I know lenders are struggling. Refi's are gone, that leaves purchases and the market is slowing. Inventory is up and prices are reseeding. We have cycles in real estate, it's normal. We haven't found the new normal since our 2008 implosion. It's going to take a couple decades to see a new pattern. It used to be a 7 year cycle. Now we're looking like 10-12 year. Maybe now the gov has got so large that there are more variables in the equation.
In todays market, I would be very cautious about buying a million dollar home. I guess it's all relative but if our market drops 10%, like it probably will then you had better plan on riding this out.
Our rental market is still strong. People need places to live. Cash flowing an income property is key. I'm currently looking to build 10 rental houses on Main St in Roseville. The lots are large enough for an ADU too. I'm going to plumb utilities for the ADU, that will be phase II. There is no retirement plan at a realtor, need to have passive income.
What will next year bring?
