Changing Times and Reading the Tea Leaves


 2021 has shaped up to quite a year, in my view, more of a continuation of 2020 than a complete break.

More Government intervention in people’s lives and businesses and it appears more to come.

Quite frankly, this does not portend well for the future in many areas.

The real estate and stock market bubbles has continued to grow although recent statistics indicate the real estate market (thankfully) is starting to slow.

To clarify, real estate prices cannot continue to increase 20% per annum. That kind of “appreciation” simply guarantees an eventual decrease in the real estate market.

The recent Democrat Party tax overhaul proposal contained several anti-real estate investor language including, a requirement that self-directed IRA’s (SIDRA) could not own investment property, among other provisions.

Fortunately, investors and investment groups took action, (thanks NAREIA, &. CORREE) and let their representatives know that this would not be acceptable and it was withdrawn from the legislation.

And thanks to the MREIA members who took the time to contact their elected representatives on this important matter.

However keep in mind that those favoring limiting your investment choices will try again so we must remain vigilant and be prepared to fight back.

In any event the tea leaves are there to be read and deciphered.

This week Zillow announced that they were getting out of the house-flipping business. Their CEO stated, they are not meeting the returns that they had projected.

No surprise there. Real estate investing, particularly single family and small multi-family properties at a nationwide corporate level is tough to achieve.

I also suspect that Zillow is also aware that the 20% annual appreciation is about to end. A smart observation on their part.

There are other indications, such as Realtor Magazine just announced their data shows foreclosure filings are up 68% in the 3rd Quarter 2021 from the same period in 2020.

This logically follows the fact that the national loan forbearance relief is expiring.

OK, so what does that mean for us as investors?

Soon there will be terrific opportunities for the intelligent investor. Increasing inventories via foreclosures and a general slowing of homes sales means more motivation on the part of sellers.

In NJ it has been widely reported that we have a severe housing shortage of new residential construction. A study conducted by The Builder’s trade groups asserts this shortage.

I don’t buy it. NJ ‘s population increase has not kept pace with the rest of the nation. We have had a short bump up thanks to New Yorkers who finally had enough of Di Blasio and Cuomo which has slowed

IF NJ’s builders follow the recommendations of the study there will soon be a glut of residential housing in NJ.

Back to the “intelligent investor”, my fellow MREIA members.

This will create a golden opportunity for those who can locate and find those motivated sellers. Interest rates are likely to stay low, the government cannot afford to allow the Fed to raise them too much. The Federal Government has to make interest payments on nearly $30 trillion and counting, a mountain of debt your “public servants” have gifted taxpayers.

A debt that is refinanced effectively on an daily basis via the purchase of T-bills or treasuries, which means they will do anything to keep the interest rate artificially low.

And as the Federal Government pursues inflationary policies, whether they will admit it or not, real estate values, in the long run will likely keep pace with inflation.

Therefore, for the in long-term investor, the aforementioned golden opportunity will exist.

To paraphrase Warren Buffet; buy when others are selling and sell when others are buying.

Wise advice indeed.

HEADS UP!! The Main November MREIA Meeting will be held the 4th Monday of the Month on Monday November 22nd, 2021.

The topic will be Equity Sharing featuring Harry Frieland and yours truly. As the market changes we believe Equity Sharing will be one of the most important investment techniques that MREIA members can utilize. See you there!

To Your Success,

Dave Corsi


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