Even where there are jobs the value of real-estate is sinking fast. My wife's parent's former house here in Denver is a good example. It is a 50-year old brick ranch on an 80 x 80 foot lot, with 4 BRs and 2 baths, a 1-car garage, substantial recent remodeling with a new gas furnace, water-heater, newer shingles, and upgraded baths, large mature trees both front and rear, central A/C and a lawn sprinkler system, walking distance to major shopping, a public library, and public transport including a casino bus. The house was appraised at $235,000 18 months ago.
My wife's folks moved-out of it in July of last summer. They tried to list it at $219,000 and didn't get a single offer. Then they dropped it to $209,000. In August they dropped the price to $199,000 and got one offer for $160,000, which they laughed-off. In late August they again lowered the price to $195,000 and only got one offer, this time a cash offer for $139,000. And between September and October 39 people looked at the house, but not one of several interested parties could get approved for financing. Then the realtor quit after my wife's folks wouldn't drop the asking price another $10K or more.
Imagine that: Having to take a hit of one-third in one year just to sell your house? Now my wife is renting the house to 2 late 20-somethings for $1000/month. At least the mortgage is still getting paid, which is a lot better than some homes these days. In fact, just in that neighborhood of SW Denver, (which is about 3/4ths of a mile by a 1/2 mile), there were 53 properties in foreclosure and two dozen more offered as a short-sale, just in November. And every day more and more people are getting laid-off, in-fact over 1.2 million just in the last two weeks in the US.
If nobody can afford to buy or rent houses or get loans to buy houses what happens to rents and home values?
At least gold is portable. Hope for the best, and prepare for the worst.
In the Great Depression my mom's mother and dad lived in my mom's grandparent's house with 4 other siblings of my mom's mother and two of their spouses, along with a couple of grandchildren, and they shared space with several other relatives from time-to-time. And looking through a family history there was a section about some level of involvement with the Civilian Conservation Corps too. Let's just hope that it doesn't get that bad again.
If there is no growth to overcome all of this increasing the money supply for bailouts, the only possible outcome is having to borrow still more money, print still more money, and/or devalue the Dollar even further. For now we are OK because a number of other currencies are worse-off. But what happens when the Chinese recover before we do?
It might be a good time to get down to Home Depot and pick-up a wheelbarrow while you still afford one.
"We stay here, we die here. We've got to keep moving". Trucker Mark