Gold versus Real Estate

Buy gold or my first home in this market? Are you asking yourself this question? This real estate market, as of May 30, 2009 until October 8, 2009, is fantastic for sellers not so great for buyers.

REAL ESTATE

Why? Today, mortgage rates are the lowest in history, and many people have variable rates at 1% and fixed five year terms as low as 4.00%. Buyers are well aware of the low interest rates, and are flocking into the market place.

In addition, this current market has the lowest inventory of homes on the market in decades; in fact 42% lower than this time last year. That translates into more buyers and higher prices, simple laws of economics or the law of supply and demand. Few homes generate higher prices. I hated economics, but I understood that concept.

Prices, despite the slow beginning to this year, are only 1% off of the booming 2008 real estate market, and all of this during a recession. Click here to read the September 2009 market report.

If you are one of the unfortunate first time home buyers that has tried to buy a home, but been in numerous multiple bid situations, now you know why.

However, you might be luckier than you think in your failure. Listen to the video below.

GOLD

Now back to the original question, to buy gold verses real estate. Gold which often performs well when the US dollar is doing poorly is reflecting many home owner’s deepest fears. Something is just not right with all this happy economic forecasting that the recession is over.

And from my experience when I interact with home owners each day, they are afraid of the economic climate. Most are terrified, so they are staying put. This accounts for the low inventory, as well as the real fact that the baby boomers are no longer fuelling the real estate market.

As the US dollar continues to fall our Loonie has been climbing. What does that mean for real estate? This current over heated real estate market will just get hotter, which will lead to inflation, and continued higher prices. But for how much longer?

The Canadian government will feel pressure to hike interest rates to cool the market, which unfortunately will send the dollar even higher. The stronger our dollar gets, our products become more expensive, we become less competitive, and the US stops buying our products.

This of course leads to layoff so that companies can remain competitive. Unemployed people don’t buy real estate, so eventually real estate prices must drop. If you are looking to buy your first home, it might be much better to wait for these prices to drop. For an in-depth look at why real estate will decline click here for October Archives (End of Days).

If you have some extra funds, it might even be wish to invest in gold to come up with your down payment. This precious metal has gone through $1000, and many believe it will go to $1200-$1500 or even beyond.

So while real estate is expected to drop, gold is expected to continue to raise, because of the declining or some might say dying US currency. Some people like to keep the physical metal, while others prefer private placement in depositories. For much more on gold click here.