Saw Peter Schiff Speak Last Night

[Mark Fitzpatrick]

Schiff is one bright dude (he predicted the real estate crash), and he doesn't paint a rosy picture of our economic future - unless the government drastically changes course from it's borrow/spending binge in the near future.

Unless the government hugely slashes spending and raises interest rates, he sees a dollar crash and US sovereign debt crisis in the coming years. The result will significantly higher prices on everything, a lower standard of living, and a much worse employment situation. Not pretty.

Anybody else happen to attend?

[Arthur Garcia]

Mark,

I too think prices of many day-to-day items are only going to increase as the value of the dollar declines.

However, I think shelter/housing is always going to take up the largest percentage of earned income. There are a few other points I would argue that make rentals one of the most stable assets for the next 10-15 years.

Fixed rate - if you can lock in an interest rate of ~5% and generate a annual ROI of 18+ percent (in today's dollars), you're always going to beat out inflation - even if you don't raise rents. Not to mention principal pay down of the debt, tax breaks, while paying bake the debt with cheaper dollars, etc.

Demand - The echo boomers (baby boomer's children) represent the largest single demographic in the history of the US. Many of these individuals are currently renting apartments or living with their folks. Once their families expand, they will want to move into a SFR. In many markets the rent on a 3/1 is pretty close to the rent for an apartment.

Long term appreciation ((WAY down the road)) - I know it is hard to imagine now, but there will be appreciation. I am not talking about the crazy days of 2005, but at the very least a revert to building costs. In my market, I am buying so far under the cost of construction that the local builders can't compete. Eventually once the REO inventory is down to a more manageable level, the prices will have to revert back to the true cost of building. Like I mentioned earlier the dollar is going to continue to lose its value, as such, all the costs associated with buidling a house - labor and building materials will go up, thus boosting the median price which acts as another inflation hedge.

There are about 4 more points, but I don't want this post to go on too long. Even if I am wrong, which I don't think I am, I am not sure you can "invest" in a better asset class at this time. I know Peter is big on investing in markets out of the country, but I would still argue that investing overseas isn't as simple as it sounds. Are you investing in emerging markets?