Wednesday, August 12, 2009

Apartment Vacancies Will Drive Housing Values Lower

Colorado has one of the lowest State unemployment rates. Imagine what is going on in most other States:

Apartment Vacancies Spiking Higher

Here are the factors:

1) unemployment
2) overbuilding
3) growing foreclosures

The Government can throw money at 1 and 3 - we are seeing in the recent non-farm payroll reports that Government hiring has been rapidly increasing and the Government is throwing billions in a failing attempt to restructure mortgages for some homeowners (over 50% of mortgage modifications go back into default within the first year). #2 can not be addressed except with a lot of time and a real growth economic recovery. It will be a long time before the latter occurs.

The solution used to address 1 and 3 - Government spending - will continue to ramp spending deficits higher, devalue the dollar and eventually create rampant price inflation. Remember this: "we will see deflation in everything we own and inflation in everything we use" (ultimate source of quote unknown)

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