2% INTEREST, $40 TRILLION IN DEBT, AND OTHER SURPRISE ENDINGS
Bruce Norris’ latest predictions and forecast for California real estate for 2017-2027. Take-home course comes with 250 page manual with over 400 charts. Includes portal access with video and audio recorded during the live event. Internet connection required.
LETTER FROM BRUCE NORRIS
Strange times we are living in as investors. Figuring out what’s next has never been more difficult. What we have experienced in the last few years has been the effects of monetary policies unthought of and unheard of until now.
For about eight years, the Fed fund rate has been nearly unchanged and below 0.5% interest. That has allowed asset prices to grow beyond reason in some cases. It has altered what people will invest in as they chase yield. It has altered monetary policy because it is so inexpensive to borrow money. Why not create or borrow tons of it?
As yield on investments decreases, the assets that produce income have exploded in value. I recently spoke at an apartment association event. About 600 people crowded into the room to hear what I had to say. Many people had no seat and stood the entire time. Why were they there?
I asked: “By the size of the audience, you are either really excited about what’s going on or really concerned about what’s next.” What followed was a little bit of laughter and then silence. Finally, when it was completely silent, there was a question: “Do we have a price bubble in apartment buildings?”
I’m standing in front of 600 people, many who wanted an answer to that question. I thought the best possible answer would come from them, so I asked, “How many of you would buy your own apartment building at its current valuation?”
What followed was very revealing; sort of like a kid that got caught with the hand in the cookie jar. There was a wave of laughter from one side of the room to the other. I could almost hear them saying, “Yeah, we know this stuff is over-priced and hell no we wouldn’t buy it!”
600 went home that day and did what? They own an overpriced asset and fully agreed it was the truth. Will they sell their over-priced asset before the reason for the over-valuation changes? Of course not! That’s not what we usually do.
Most of the time, I write reports with a look into the future a few years out. This report differs in that I look out over the next ten years. About the length of the next two presidential terms!
There are decisions that must be made in the next few years or the trajectory of debt will be irreversible. I’m not convinced that the tough decisions will be made, so we will play several scenarios out eight years and see where we land. To me, that will have everything to do with where it will be safe and profitable to put money.
We’ve witnessed new blueprints on how to handle market crisis over the past eight years. In the 1990s, lenders were forced to begin foreclosure on a property after the borrower was 90 days late. In 2008, we didn’t foreclose at all (extend and pretend).
If you looked at the most damaged state for upside down owners at the peak of the crash, Nevada would have been the clear winner. Some 75% of owners were upside down with no hope in sight for their prospects improving. Homes were selling for 20% of loan value as REOs or trustee sales.
Then, a new policy arose. Simply, don’t foreclose, wait! State laws made it very difficult to foreclose and many people just sat there, not making a payment and still occupying a property. Unmotivated to sell at a loss and not being forced to do anything, the owner occupants just stayed and stayed.
Eventually, an interesting thing happened. The economy improved and people moved to Nevada to get jobs. This put increased demand on the real estate market. However, the owner still couldn’t sell so there weren’t enough homes to meet demand and prices began to rise. To meet the inventory shortage, builders actually began to build new housing tracts!
It was the strangest phenomena! The new construction projects caused more migration and amazingly, in 2016, Las Vegas has a building boom. Prices are back up and it was as phony as a three dollar bill. But, alas, it worked!
That blueprint is playing out all over the world. On the backs of creating money from thin air, with interest rates so low they actually create revenue for the borrower, there seems to be no end to the debt expansion. Maybe the world has discovered the secret of solving financial crisis…the ultimate kicking the can down the road formula!
Our report attempts to play out two scenarios; one where caution is thrown to the wind and one where calmer heads prevail. It contemplates the outcome for real estate prices if we have a 2% mortgage rate or if we have a 7% rate. It contemplates the national budget cuts necessary to have a fiscally sound future (which means broken promises) and we look at the national debt under the scenario of throwing caution to the wind and have it explode during the next ten years.
The next ten years is extremely important. Baby Boomers retire at the clip of 10,000 a day and will keep that pace until about 2030. We’ve made a lot of promises to that group and the tab is about to be cashed.
This report takes a look at some of the amazing new “inventions” that will expand the life expectancy way beyond what was originally plotted by the number crunchers when the social security promises were made.
Aaron covers robotics, artificial intelligence, self-driven cars, 3D printing and virtual technology and how progress in these technologies may or may not change the real estate landscape. Will there be huge shifts in the workforce, changes in occupancy rates of commercial space, and could the technologies radically change the cost of building a new house?
By the time I gave the report in February 2017, I had sold the majority of what I had owned in California. We’ll discuss where I went and why. Remember, this report looks at 10 years. It’s critical to understand WHY I made these moves. This report takes you through the thinking behind the predictions, it’s not emotional, is a comprehensive look at the decision-making process every good investor should practice. We’ve done all the work for you by having all the research on one place!
My hope is that you leave the report with some exciting new information that will make your future investment decisions safer and more profitable for you and your family.
PRE-EVENT WEBINAR & NEWSLETTER
Below is the webinar we held on Wednesday, January 25 leading up to our live event. In it, Bruce covers the chapter “Wild Cards” from the report since we knew we had very little time to cover everything in this massive report. In 2017, TNG celebrates 20 years in business so it was also an added freebie to our network. This newsletter also covers affordability numbers by the county as well as a walk through of what the report is covering and why.
- Download and read the newsletter to follow along
- Watch the video at the top of this page
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