Why Now is the Worst Time to Own Real Estate
challenged all subscribers to carefully reconsider their
position on real estate, keeping in mind the global economic
state as we approach the planned World War 3. While
primarily intended for US residents, the principles apply to
home owners in any Western nation. The reason?
When the US economy collapses, all other economies will
Thank you to the almost 40 respondents who took me up on
the challenge by sending details of recent, or imminent sales
of real estate - you have restored my faith in humanity!
Here are 40 individuals (out of 11,000!) who have seen the
writing on the wall and have actually DONE something about it.
This is one bet I'm delighted to lose!
This article elaborates on the reasons for selling your
property as quickly as possible, for those who may still be
undecided, or are completely unaware of the risks in holding
onto property in a falling market.
Let me start by saying I am not an investment advisor, nor
a property broker, nor a legal expert. I don't live in
the US, so I am not fully conversant with the ins and outs of
property ownership and disposal in the US. Obviously you
need to seek your own professional advice before taking any
action. There is a lot of reading here, but this is not
all the information available. I would encourage you to
use this as a starting point for your own research. This
is a serious matter.
I also realize that selling your home is an emotional
decision. It is not an easy decision, and will require
much thought, research and perhaps negotiation with a
significant other in your life.
This series of answers in response to questions raised
provides my reasoning for disposing of real estate, as well as
links for further reading. You should also be aware that
this is NOT an unbiased article: I am unashamedly trying
desperately to convince you to do whatever it takes to achieve
liquidity. The links presented do not present a balanced
view. There are many websites who are still recommending
investment in real estate. Just remember that their
motivation for promoting investment is commission whenever a
property is sold. Their advice is also NOT unbiased.
Question: Why should I sell my home if the
mortgage is fully paid off? I live completely debt free
and selling my property will mean I have to rent another.
How is that a better financial position than owning my home?
Answer: This is by far the most frequently
asked question in response to the issue of home ownership.
It is an excellent question, but the answer may surprise you.
I'm not going to make any friends saying this, but someone has
to say it:
As a debt-free home owner, you stand to lose the MOST when
the wheels start falling off. Others who have high
mortgages will lose their homes through repossession, but at
least they will not have invested much. The best way you
could reward your economic discipline is to cash in and enjoy
the results of your self control before your home is taken
away from you.
Why could your home be taken away?
Reason 1: Even though you may have fully paid for
your home, you do not enjoy full ownership, and it may be
taken from you at any moment. This was proved in a US
Supreme Court ruling in June 2005. In non-legal terms,
the City of New London, Connecticut won a case which permitted
them to forcibly remove land from an owner, Susette Kelo, so
that a city development could continue. The process is
called 'eminent domain' and the ruling set a precedent for
other home owners. In essence, the decision allows city
governments to take land from one private owner and give it to
another if the government will generate greater tax revenue or
other economic benefits when the land is developed by the new
owner. The case was a complex one, and we will not
analyze the specifics here, but encourage you to do so using
the links below:
Supreme Court Opinion: Kelo vs. New London
Statement of Ralph Nader on Supreme Court Eminent Domain
In a bizarre turning of the tables, the Eminent Domain
Clause is now being used against one of the judges who voted
against Kelo. See
California Eminent Domain Handbook
Strengthening the Ownership of Private Property Act of 2005
Eminent Domain & the New Orleans Land Grab
Reason 2: If your government doesn't
take your property, an act of God could. Just ask the
people of New Orleans. Insurance companies don't pay out
in the case of an act of God.
Reason 3: Flexibility and a wider range of
options. Only you will be able to decide for yourself
how real the threat of Martial Law is, and the question you
need to answer is whether you would rather have a roof over
your head while bullets are flying around outside, or the
freedom to simply walk away with cash (or rather gold) in hand
to choose a safer area to live in. That decision needs
to be made now. You cannot make a rational
decision after Martial Law is declared, or after
the bottom drops out of the market. What would have
happened to Noah and his entourage if he had waited for
raindrops to start falling before commencing building of his
Reason 4: Past performance of the investment
value of your property is no guarantee of future performance.
This should be obvious, but the reason is more sinister than
most are aware of.
The Federal Reserve Banking System is a privately owned
international banking cartel of wealth beyond comparison,
which collects billions of dollars in interest annually and
distributes the profits to its shareholders. The Fed
manipulates inflationary and deflationary cycles to their
(business) advantage. Depressions are used to confiscate
possessions from those who cannot maintain payments.
These same items are then resold during inflationary cycles.
In short, modern money, and specifically credit, is a game,
and you are trying to partake without knowing the rules, or
even who the real opposition is. You cannot win when
odds are so severely stacked against you, unless luck plays a
hand. Luck has favored millions of home owners to date,
but it's time to cash in your chips.
Alan Greenspan's resignation is, to me, an indication that
he does not want his reputation tarnished now that the next
deflationary cycle is planned. He knows what's coming
and wants no part of it. Neither should you.
The Fed is Privately Owned
The Fed's Origins, History & Current Strategy
The Greatest Theft in the World
A History of the Federal Reserve by Allan H Meltzer
The Manipulation of US Debt
Strategic Wealth: How the Money System Works
Note that some modules are missing from the link above.
You will have to use these links:
Question: What if I sell my home and nothing
happens economically or militarily? I will have no home
and will have used my capital to pay rent.
Answer: What if you retain ownership of your
$400,000 home and then cannot even sell it for $20,000 in 12
Seriously though, I realize there is a risk in selling your
home. I personally believe the risk is higher in NOT
selling, but only you know your own circumstances. Only
you can make that decision. I have done my duty by at
least getting you to think about this.
Question: If I sell, what should I do with the
Answer: Again, only you know what your
personal circumstances are, so you will understand why I don't
offer too much specific advice. The whole purpose of the
exercise is to get your hands on the value of your real
estate. So whatever you do, don't leave it all in your
bank account. If it were me, this is how I would invest
the excess cash:
- Keep 20% in cash in hand, preferably spread across a
number of currencies. (Can be stored in a vault, but
preferably not with a bank - you may not have access to it
when martial law is declared).
- Use 20% to purchase non-numismatic (i.e. no collectors
value - just the value of the metal) gold and/or silver
coins (not shares). Be aware that gold ownership may
soon be declared illegal. The solution is naturally
not to let anyone know about your gold horde.
- Take another 20% and purchase food and other supplies
that you will need to survive for a period of 6 months or
- With the remainder, rent a home in a rural community at
least 100 miles from a major city, ideally with a large
basement or underground shelter.
Remember that we're entering a very different phase of
economic history and the old investment rules simply no longer
apply. Today's circumstances call for creative thinking.
May all your decisions be wise and calculated.