A reader wrote: “Martin’s latest post says real estate will rise, but a chart posted a week ago predicts dire things for real estate after 2015. Which is it? Can you ask him please!”
Real Estate is the most difficult to talk about because it is so diverse lacking a single market. My post saying real estate will rise with higher interest rates is noting a correlation that was the question. Real estate in some sections of the country is rising. I would not apply that to the city of Detroit. You have to use your head on this one. We are in a recovery phase where real estate will rise into 2015.75 on a normal bounce in general. That does NOT equate to new highs. There is a lot of European buying right now of US real estate. I have said before, real estate is out of the banking system and that is its plus right now. Americans can go into European and Europeans are buying into America. In both cases, capital is looking to get out of the banking system.
The banks are lending again, but not like they use to in the USA. Therefore, the bounce will NOT make new highs. The real estate that is rising is generally INCOME PRODUCING. There are some pools in Europe of commercial property with yields of 7%-15%. That is pretty damn attractive right now. Europeans have been buying condos in NYC as a means to transfer wealth out of Europe without the banks reporting what they have.