What follows are some random thoughts on the Income Property marketplace as I see it, and from what I’ve heard on the street. By no means am I an economist. And I don’t think that anyone can accurately predict the future. The Commercial Property Market is very dynamic and constantly changing. But it is interesting to hypothesize and to see how close we can come to predicting the future. Use these thoughts as an add-on to what you’ve already experienced and are currently experiencing. The more views Abdo Romeo you can get, the better you will be at understanding this dynamic marketplace and be able to make up your own mind as to how the future will unfold. With that in mind, here goes:
I’ve been told by several economists and market pundits that the current economic climate can be characterized as an “Atypical” Recession with an “Atypical” Recovery.
Okay, but what does this really mean? Obviously, in simple terms, it basically means that we are not in your typical recession and recovery scenario. Although we’ve been seeing an improving economic recovery since the market meltdown of 2007-2008 there are signs out there that this recovery is slowing down, possibly even on the verge of faltering, and the recovery is definitely becoming an uneven one.
Globally, all is not well. Distinct markets have their own problems such as in Japan where they are possibly looking at a deflationary environment, and everyone is aware of the U.S. problems where the housing market is still on its rear end. However, we can generalize by saying that we are in a low growth environment with significant debt loads both for the government as well as for individuals. Overall, according to these experts, we can expect to see low consumer demand out there, which will eventually translate to excess capacity. The economies of developed countries will continue to go nowhere. The market pundits say that because the recovery is atypical it is not going to work itself out in just a year or two. Disinflation has been mentioned as a possibility. Not exactly a rosy picture.
The US has just recently announced the implementation of Quantitative Easing whereby the Federal Reserve will go out and buy Treasuries. This means the US will be printing a lot of money in order to do this. I guess Ben Bernacke figures that he can print his way out of a recession. Japan is also set to start printing Yen. You’re going to start seeing currency destruction all over the place as countries begin playing fast and loose with their currencies. This portends massive inflation down the road. The stock market is actually predicting high inflation down the road as is evident in the recent runup in the price of gold (investors are putting their money in gold so it doesn’t erode when inflation starts up). As I write this article the headlines are rife with the new highs that gold is hitting.