The Housing Market is Booming, Not Busting!

Quite a number of Wall Street analysts and experts always maintain that one should be a contrarian when it comes to choosing investments. They say that a truly great investor should do exactly the opposite of what the media is currently churning and spewing day by day in radio, newspapers and magazines. When Money Magazine, Fortune, Business Week etc. all tout specific stock picks, for example, you can be sure that those stocks are the ones to avoid purchasing. Likewise, if the media is telling everyone (as they did in the late 1990’s) to buy as many tech stocks as possible, you know for sure that the party is almost over.

The very same holds for a “don’t buy” pessimistic attitude. With all of the incredible negativity regarding housing prices about to tank and about the imminent bubble, one wonders whether all of this sentiment is merely journalism at its worst - a mere attempt to “sell” newspapers and magazines, rather than present true information. Just yesterday, for example, the Office of Federal Housing Enterprise Oversight reported that “house prices registered the biggest price leap in 26 years” throughout the second quarter of 2005 (MSN money, 9/15/05). Furthermore, David Lereah, chief economist for the National Association of Realtors, predicts that due to the overall inventory of homes, and due to the dramatic increase in demand for new construction materials caused by Hurricane Katrina, housing prices nationally are bound to keep rising even further. This fact, in combination with the strong probability that interest rates will remain at current levels, will surely keep the market going for quite a while to come. Unfortunately, I have yet to see the mass media report on these facts and upcoming trends.

There’s plenty of anecdotal evidence of a great number of New Yorkers who naively assumed the media was right about the “housing bust” and sold their homes or apartments 2 years ago, last year or even last month. They mistakenly believed in the idea that the should sell their home before the bubble bursts. Truth be told, some of them had to sell for many other reasons, but the ones who sold because of the above premise are sorry indeed! They couldn’t possibly re-purchase their own home that they sold a mere 12 months ago unless they are willing to pay 25% more than what they sold it for. This indeed is a crying shame.

I am clearly one of those contrarians. Having just closed on a 2 family home in Brooklyn myself, I for one am putting my money where my mouth is. New York real estate is going to continue to go up!! Please make sure to repeat this (and you can quote me as well) to your prospective buyers. There’s nowhere but UP, UP, UP for prices to go. As far back as my earliest newsletter this year (see the one I sent out on January 21, 2005) I predicted that the 2005 industry outlook was for sales this year to be incredibly brisk and for prices to go further up. I listed there over 10 incredible factors that will propel prices higher. They were accurate then and they remain accurate now.

For those of you who may not be able to reprint the newsletter from January, call or email me and I will gladly send it out once again. The bottom line is that housing is NOT overpriced now and it will continue to go up in the foreseeable future,

Have a great weekend!