Road To Ruin

Heres a note from a CPA in Florida regarding home prices. As written here earlier, I believe the housing bubble is beginning to pop. Apparently Sir John Templeton sees things in a similar light.

I am a Certified Public Accountant here in Central Floridaand also work as Financial Reporting Manager for one of the largest timeshare developers in the country. Thanks to the nature of my work and from talking with colleagues and professional contacts, I feel I have a pretty decent understanding of the economic pulse in the Orlando / Central Florida area.

Back in Sept 2004 my wife and I decided to sell our house of five years. We felt that the housing bubble in the area was pretty much at its peak and knew it was time to bail out and pocket some decent profits. We have been renting since then and we don't have plans to buy real estate until prices come back to earth and then some more.

Interestingly enough here in Central Florida we can hear the hissing sound of the bubble deflating...a few months ago the builders were having lotteries for just the privilege of getting a first shot at buying these new houses. Well George, the lotteries are no more...also, you can see builders now offering perks, discounts, and incentives to move their inventory of houses. Real estate agents are genuinely worried and pushing their services on cut throat competition to secure a dwindling pool of willing (and able) buyers.

This is most likely the beginning of a process that will escalate, feed on itself and drive prices well below what most people would think possible.

In other news, Sprott Asset Management has just published their annual outlook piece entitled Road to Ruin Part II. Definitely something you will want to read. It reinforces some of the viewpoints taken here at The Armchair Economist.