I said it was going to happen. The warning signs are visible. Everyone’s trying to make a quick buck. Now even Greenspan is warning the imminent drop in housing prices. Flipping is the new trend, especially down in Florida, where homeowners purchase houses and then sell them in the near future, typically ‘flipping’ a profit. It’s a get rich plan "where anyone can do it." If you’re ever up late, many of the paid programming is actually promoting real estate flipping. The problem here isn’t the business or the industry, the problem is that everyone is doing it. These people don’t know what they are doing, don’t see the risk involved, and are going into massive debt.
In the late ‘70s, the Asian market was booming beyond their wildest dreams. Japan, leading the pack, had record GDP, export, and import growth. The citizens began spending and spending, increasing credit lines, and creating large debts. Shortly following that, an implosion occurred creating one the of largest foreclosure rates where even banks were failing. Contasia was the term coined for this crash because it resonated across the world. The international banks were sweating, the IMF couldn’t even handle the requests, the whole world had to chip in to fill in the hole. Some South American countries are still trying to fix the repercussions of Contasia. It is happening here.
Housing developments, commercial business, everything is going up like weeds. The same exact thing happened in Japan. Nothing came of it. All of the units filled about 30% and they couldn’t even pay to fill the rest. Everything started to crumble. Housing developments were unfinished, places were abandoned, nothing was safe. I see this happening, housing prices will fall, people will foreclose, inevitably the ‘surfers’ on this wave are going to wipe out. That will resonate across the US. I don’t want to say I told you so but see for yourself. I don’t think even Greenspan will be able to get us out of this one. On the plus side, if your shopping for your first home like I am, if you rough it out for 6-12 months, you’ll get a lot more for your buck.
If you don’t believe me or think I’m crazy, refer to this article where the stats and the quotes will make you think twice about flipping: http://business.timesonline.co.uk/article/0,,16849-1752866,00.html