Posted by Kenneth Hocking on September 29, 2008 at 15:46:24:
But is it volume based as the other cities Rich mentioned.
By Book or Crook! - Posted by Kenneth Hocking
Posted by Kenneth Hocking on September 28, 2008 at 23:08:28:
OK so everyone understands that the RE values in many markets became super inflated due to BS Leverage allowed in Mortgage Magic.
And Everyone on here knows we just ate 700 Billion in BAILOUT money.
But has anyone even stopped to consider the Leverage currently set in our Stock system.
When in 1992 a P/E ratio of Double digits seemed VERY aggressive stock … How it is now that even our best Blue chips Trade at prices that are well into double digits multiplier versus their true earning power…
Wonder what the PE ratio of our corporate world will look like if they can not get Credit to continue operating at full speed…
if you take out the Wealth creation of RE, and take away the 20-30-40 times leverage that exists in many Hedge and investment funds and take away the FORCED investment of 401K plans into various Mutual Funds I think we would find that DOW 6000-8000 is a more of the top end at best.
BOOK value of the assets times 3 is aggressive for a stock if they are un-levered (not allowed/capable to borrow to expand)
Pay close attention to the credit default swaps as the TOWER in the 100’s of trillions in comparisons to the 700 Billion of inflation just added to the dilution of the market in Real values.
Interesting how Value is based on Auction Frenzy not added value.
My Suggestion is look for markets that are NOT service dependent an have good jobs based around true commodities and buy properties there…
Ports, Energy cities, agricutural, governmental cities, Hospital cities all tend to survive a bit better in recessions thatn other economies. Those hardest hit will be services and industrial cities. Like Detroit has been in for a while.
The point - Posted by Kenneth Hocking
Posted by Kenneth Hocking on September 28, 2008 at 23:14:45:
It is likely both Stock Values and RE values will retrace to the levels closer to 2003 levels as a stabilizing point… What does your market look like if that occurs? Use that as a Worst case guide in Making offers!
past that - Posted by Dan
Posted by Dan on September 30, 2008 at 04:06:25:
We are now at 1999 levels here in florida.
Ken… - Posted by acw
Posted by acw on September 29, 2008 at 08:09:02:
Thanks Ken,
One thing you mentioned that i thought was odd…“Agricultural?”
What cities do a large volume of Agr. biz…Do you know?
~AC
Agree with Rich PLUS - Posted by Kenneth Hocking
Posted by Kenneth Hocking on September 29, 2008 at 15:52:12:
Rich gave a great list of the AG cities next you need to look at the effect of the bubble and the bust on those economies and RE markets.
You will likely find Chicago and the one with the most Run up during the Bubble…and greatest risk of lay offs in the financial turmoil so I think it comes off the list.
With weak Dollar the exports are up so port jobs are open and energy will still be needed so energy cities get a plus…
But hey I may be biased as I live in a Energy Port Ag city called Houston. and we did not see much of the bubble but definitely have good jobs that are open and have affordable home prices.
Lack of credit is hurting some of the farther out subdivisions but the inner city stuff is still doing fairly well!
but I personally would invest in many of the other cities that Rich listed as well.
Agricultural Cities - Posted by Rich-CA
Posted by Rich-CA on September 29, 2008 at 10:43:11:
Would be ones surrounded by farmland. Such areas include Chicago, Kansas City, St. Louis, Dallas/Fort Worth, San Antonio, Houston, Omaha, Modesto, Fresno and the like. Basically if you get outside of town and see farms, the first point of shipping the crops is the nearest rail hub, and that is what got many of these places into being cities. All of them have other industries as well, but they tend to be more broadly based than places created for industry.
There are also the “oil towns”. Some are on both lists such as Houston, Oklahoma City and so on.
Thanks guys - Posted by acw
Posted by acw on September 30, 2008 at 05:14:59:
Thank you for the input.
Re: Agricultural Cities - Posted by David Krulac
Posted by David Krulac on September 29, 2008 at 14:03:35:
the largest industry in PA is agriculture
Re: Agricultural Cities - Posted by Rich-CA
Posted by Rich-CA on September 30, 2008 at 12:10:15:
And of course I was raised in CT but born in SD and my personal experience has been a “industrial” northeast and “agricultural” midwest. I drove across country many years ago and the one place where what an “agricultural city” is obvious is in the midwest. Oh, and the original post asked about cities not farms. Some cities are dominated by agriculture - its the place where the stuff is shipped and/or processed. Note I did not include Bakersfield, even tough it is in the most productive agricultural region in North America - California’s Central Valley. That is because a huge part of its base is oil.