Cracks in the real estate market

Signs of financial stress.

The effects of higher interest rates have a 6 to 12 month lag period before showing up in the general economy.

It appears we’re seeing those related issues now.

A Canadian real estate lender has recently halted redemptions on its fund.

This means investors can’t get their money out which is a pretty big deal. Romspen Investment Corp said the reason behind this decision is because “borrowers stopped making payments.”

Imagine you lose your job and want to sell some investments to pay the bills. But you can’t because of a liquidity freeze.

There is trouble in the United States as well.

 

When small businesses can’t afford to continue operations they close down. This will lead to big layoffs.

The problems today in the economy is just the beginning. I think next year is when we’ll see high unemployment.

The stock market rally over the last couple of weeks have been great. But I believe we’ll get another correction, at least 10% down from here, before we see new highs again.

 

I plan to invest $20,000 of new money from now until the spring of 2023. That’s about $5,000 per month. My savings rate is non-existent at this point so I will be borrowing the money from my HELOC or margin account. ๐Ÿ™‚ I do believe the stock market will be higher by the end of next year, but I’m just not sure how it will get there so I’m hedging my bets and pacing myself.

 

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Random Useless Fact:

The world population is now at 8 billion for the first time.

 

 

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Kyle
Kyle
11/15/2022 2:58 pm

How do you manage your interest cost while you hold positions and wait for prices to recover?
Also did you adjust your stock picking strategy with increasing rates?

AlW
AlW
11/15/2022 4:23 pm

I haven’t had any borrowers stop making payments yet. However this is why I’ve started decreasing the LTV on loans – inflated appraisals. Ideally, you can get legal control of the house and liquidate it before it turns into a big mess.

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maplethrift
11/19/2022 2:25 pm

to be honest I’m not too worried but that doesn’t mean I’m optimistic…I’m far from it given the current situation I doubt by the time we roll to 2025 we’ll see any useful changes, the problem is not we keep on reiterating the interest rates are too high, inflation is out of control etc. yeah… how about y’all tell us HOW you’re gonna combat it, well there isn’t answer on this lol the world leaders don’t have any other solutions as increasing rate is the easiest way to keep inflation in tow but with that being said, here’s the thing… we live in Canada so we’ll be alright and as brutal as this sounds, this is definitely not a time to missed on cashing in to the world’s woes.. personally I missed out on 2008 so this time around I ain’t missing this ride especially after coming out decently with the whole GME debacle lol Canada currently has the capacity to supply 30% of the world’s natural gas but why can’t Trudeau strike a deal? Canada is the #1 producer of potash but why aren’t we selling to the world? who benefitted the most out of the Russian-Ukrainian War so… Read more ยป

jambr403
jambr403
11/22/2022 6:43 am

Pretty gutsy to buy on margin right now. I’d wait for an SPX3200 like event then maybe buy on margin, but not yet.