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I highly respect Robert, have read most of his books, and actually have met the man live in Chicago. I wouldn't be in Real Estate for an investment right now. The Nasdaq is just making so much more.
Here's an interesting piece on Housing Bubble:
DOUBLE WHAMMY
The US homeowner just got hit with a double whammy.
The first whammy is the recent run-up in prices, spurred on my low interest rate mortgages which stimulated what Allan Greenspan termed "frothing" but which more honest observers called "land flipping", with the intent to inflate property prices and create artificial equity which could be borrowed against. One third of recent home purchases were not primary residences, but investment properties and second homes for the ultra rich. Despite Greenspan's reassurances, the phenomenon looks like a bubble, walks like a bubble, and quacks like a bubble. When the bubble pops, people are going to be stuck making payments on homes forth far less than they owe, to banks able to raise the interest rates on the variable-rate loans whenever they wish.
Now comes the second whammy. The United States Supreme Court has just ruled that eminent domain can apply to private development. That means that a developer who is chummy with the local mayor can use the city to take away your home and use the land for a factory, shopping mall, bordello, anything that he says might produce more tax revenues the local government can use to, well, fund pay raises for the legislature, and make payments on all the loans they have recklessly made over the years.
And here is how it all works together. Eminent domain requires that the party seizing the land pay the owner what the property is deemed to be worth. The new law requires that the developer be able to claim his new use of the land will produce higher tax revenues.
When the housing bubble pops, and property prices drop (dragging property taxes down with them), not only will it be easier for developers to demonstrate that their new plan for the real estate will work, but the price they will have to pay for the land will drop as well. So this means that virtually every property in the US will be up for grabs, at a fraction of the price the owners paid for it, leaving the current owners stuck with the mortgage for the inflated price they paid for the land.
Boy did you just get screwed when you bought that two bedroom for $800,000!
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