Housing Will Surprise To Upside If....
A: With all the housing bubble blogs and talk I feel it would be a good idea to take the other side of the coin; at least for sake of argument. Here are just a few thoughts on what could happen in our near future that would keep housing in favor over the next few years.
1. Rents Continue To Rise: You've read it in recent headlines and in most newspapers; rents are rising in NYC! Inventory remains very tight and landlords are now requesting a 8% rent hike to be passed and the min. price of $2000/Mth for rent stabalized units to become free market, to be lowered. With higher energy costs they might get what they want! Keep an eye on this situation very closely as chances are you will be paying more money for a NYC rental than you are used to. This will only make housing more attractive for those who have the means! If you do not have the means then start saving for your first home purchase so you can build wealth.
Rents Heading Up In '06 (CNN Money)
2. IAEA Action on Iran Has an Effect: According to another CNN Money article:
The International Atomic Energy Agency has urged Iran to extend greater cooperation to U.N. inspectors to resolve questions about its intentions. U.S. Undersecretary of State Nicholas Burns predicts that if Iran does not comply with the resolution, there will be a serious attempt to impose another resolution calling for sanctions.What if the UN's future actions cause Iran to back down in their policy? A long shot I know, but it is possible. If this were to occur it would rid geo-political uncertainty and increase confidence in many global markets. This in turn would have a positive effect on stock markets and increase the chance that the Fed pauses in future monetary policy hikes.
U.S. Predicts U.N. Support for Sanctions in Iran (CNN Money)
3. Nigeria Gets That 500,000 Barrels/Day Back Online: Militant attacks in Nigeria have taken off-line about 500,000 Barrels/Day; mostly supplied by Royal Dutch Shell PLC. What happens when this supply comes back online? We already had oil drop yesterday because of the surprise increase in inventory. Market forces at work will drop oil prices even further should Nigeria start exporting again. Keep an eye out for this news story to come in the coming weeks and what effect it has on the price of oil; DOWN!
As oil prices ease they will drag along with the high prices of precious metals which will ease the Fed's worries about future inflation. This in turn will have a positive effect on lending rates as the fed will not raise the fed funds rate as much as they would if oil prices remained above $70/Barrel!
Oil Slides Lower in Asian Trading (CNN Money)
4. Dollar Remains Weak: I don't need to go into details here as I just did a post on this; The Weak Dollar & NYC Housing. As long as the US Dollar remains weak, NYC real estate will be a attractive investment from a currency standpoint for foreigners; especially in Europe!
5. Economy/Jobs Continue To Surge: Corporate Earnings and a strong Retail Sales report for April are bullying the economy! In addition US non-farm productivity rises at a faster-than-expect pace of 3.2% annual rate while hourly compensation surges. As long as the economy continues to surge and jobs are being created, people will have money to invest in buying themselves a home.
Productivity Jumps Above Forecats (CNN Money)
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