KEYNESIAN CENTRAL BANK CRAZINESS CAUSING INSANE ASSET BUBBLES IN REAL ESTATE
by Jeff Berwick, Dollar Vigilante And they say there is no inflation! When you begin pricing condominiums in the fractions-of-a-billion dollars I think its safe to say there is a lot of inflation! We’re not saying it isn’t incredibly nice, but it better be for over nearly half-a-billion dollars! Yes, this penthouse in Monaco is on offer for $400 million.
A bit out of your price range? Don't worry, all the other units in the building are in the affordable $100 million range.
Property bubbles are popping up all over the place after seven years of Quantitative Easing. Hong Kong, Los Angeles, New York, Vancouver and London are just a few places where you can barely get a small bachelor pad flat for under $1 million.
As just one example, here is an 837 square foot, one bedroom, one bathroom condo in San Francisco available for only $929,000!
A little too small for your needs? You can get this 1,050 square foot shack in Buena Vista, California, for only $1.1 million!
A person, even 15 years ago, who owned a million dollar house would be known as being very well off. Now, in many places, you'd be known as "that super broke guy who lives in the shack down by the pawn shop".
What is going on? Briefly, central banks around the world have been printing money at record rates for seven years now while manipulating interest rates not only to near 0%, like in the US, but into negative interest rates in places like Germany and Sweden. Negative interest rates, you ask? You pay someone to borrow your money? Yes. It's that crazy now. Keynesianism is reaching its ultimate end-game.
But, all this money printing has profited some people. Who? Not many… essentialy the 1%, or more specifically, the 0.1%.
They've had a heyday seeing all the assets they own rise dramatically in price. And now, most of them know all these asset bubbles in government debt are going to collapse in The End Of The Monetary System As We Know It (TEOTMSAWKI) and so many are buying hard assets to protect themselves.
And, according to Laurence D. Fink, head of the world’s biggest asset manager, Blackrock, "Gold’s traditional role as a store of wealth has been usurped by contemporary art and apartments in cities such as New York and London… Historically gold was a great instrument for storing of wealth [but] gold has lost its luster and there’s other mechanisms in which you can store wealth that are inflation-adjusted.”
While we totally disagree with his view on gold we also think that investing in condominiums in these bubble areas in the Western world will not work out well. But, as the Western economies collapse, we do think that investment into some real estate markets makes sense… a lot of sense, right now.
FOREIGN REAL ESTATE
It's a particularly good time to look at foreign real estate in areas that have not seen any sort of bubble activity. Even better, with the US dollar currently outperforming (but not for long) every other currency on Earth you can get tremendous deals in other parts of the world. Plus, this meets our other theme of getting your assets outside of the Western world and into a hard asset (a hard asset defined as anything Janet Yellen can't print into worthlessness).
As we've stated in the past we think two main areas in particular have a lot of value: Latin America and Asia.
As just one example, in the place I currently am, in Acapulco, you can get tremendous deals.
Remember the $929,000 bachelor pad you could get in San Francisco? For something very similar, but on the beach in Acapulco, fully furnished, you can get a condo like this for under $70,000 with a pretty nice view.
That condo can even be managed and rented out for a good ROI if you aren't there all the time. Or you can own it as an investment property in a self-directed IRA as well.
If you are more in the market for a house, compare this six room villa in Acapulco for $1.3 million compared to that shack in California for $1.1 million.
It has its own maid, chef and bartending staff if you so choose who can serve you poolside at the bar. All of the staff cost, on average, $15/day, so for far less than what you would pay in property taxes in the US you can live like a king.
To be fair, though, even though that villa can be bought for $1.3 million due to the seller needing to sell, it is probably worth $2-3 million. But it just shows you the opportunities in Acapulco to live like a king whereas, for about the same amount of money in places like California, you live in a shack by the pawn shop. (You can see more photos of that villa here)
Of course, in Latin America, there are numerous other options. There are countless beautiful cities and pueblos in Mexico. Other places currently offering amazing value for property include Nicaragua and one of my current favorites, Colombia.
In Asia, I have been beating the drum on opportunities in Cambodia where business and property prices have nearly increased 10-fold since I first told TDV subscribers it is an incredible opportunity in 2010… but it is still very cheap.
TDV newsletter subscribers (subscribe here) get access to TDV Groups (http://tdvgroups.com) which has hundreds of subscribers, around the world, who have expatriated and made a life for themselves and they are happy to tell you about opportunities or real estate in their region. I highly advise anyone looking to connect with liberty-minded expats to utilize this great resource.
This coming collapse will change everything and your government registered financial advisor likely doesn't even know it is coming much less knows how to help you internationalize your assets. Stick with us here at TDV as your trusted source to surviving and prospering, during and after the dollar collapse.