Let’s Get Real about Real Estate

The market does not let people keep pulling out crystal balls and call it right too often let alone once.So people believing aftershock to be fact could be in for a wipeout in terms of being too bearish into a new bull market.Many things can go right-new president/new policies,congress deals w/debt situation,companies continue to profit,P/E of Market is resonable, MUch Cash on sidelines as Retail has continued to panic (WSJ article)...so aftershock is betting with retail right now and we all know retail/masses get it wrong. Bottom line market crashed in 1929 and ten years later not much gain...but market still was in uptrend...this is not as bad as Great Depression, so now not the time (after 11 years of market going no where)to flee....Market has survived worse (inflation in 70s, world war II, vietnam war, JFK assasination, Sept 11, Gulf War..it will survive the insurmountable debt problem and fut infl)..people who want the world to end or to live with guns in anarchy/madness be careful what you wish for.

No brainer! Real estate is crashing. Even if the economy recovers (and it won't!!!) It's crashing for certain.

I know of no one who can afford a home even at today's prices and today's low interest not to mention demographics.

Just google Chris Martenson "Crash Course" and see how well he explains demographics. It's a fact of life and WON'T be wished away.

PS, I don't want the world or my Country to end. I will however be glad to see the ponzi schemes end, The sooner the better. Those who lose in the Aftershock when it hits lost their chance to do the right thing and will have to live with what they did or didn't do. That's life in a bubble...

I was delighted to read Aftershock. I had already made these predictions previously. However I challenge the real estate points and encourage you to change my mind so that I lose less money if you are right. BECAUSE massive inflation is coming, I BOUGHT a house and have 5% equity ($30K) and 95% financed ($570K) with a 4.875% 30 year fixed loan. You say real estate will decline as a RESULT of increasing interest rates but I say "opposite". Interest rates increase as a RESULT of inflation and is commensurate with higher NOMINAL wages and thus higher NOMINAL real estate prices. So why sell? The most I can lose is 30K 2011 dollars whereas I have 30 years of wage inflation and a fixed loan on the upside and I get a free house.

Real Estate will probably gain in price and lose in value.

Since 1999 the stock markets are today where they were then give or take a few points. They did however lose value along with the dollar. About 30% in value. Real Estate will probably do the same thing.

Whether he says it out loud or not this is Ben Bernanke's objective. He needs to create enough inflation so that the millions of families that are upside down in their homes and are contemplating walking away may think twice if he creates the illusion that their homes are worth more.

The problem he has is never in the history of the world has anyone been able to re-inflate a popped bubble. Just not possible and Bernanke seems to think otherwise.

Real estate "crashing" doesn't mean anything if someone is buying a house now and plans to stay in it for 10-15+ years. Neither the "value" or the "price" will matter. Sure, if you buy now and housing prices go down, you may be underwater, but who cares? It only matters if you're selling. And you have to live somewhere.
So if you are buying for the long haul, buy a house that you like and that you can comfortably afford, then forget about it. Take advantage of the almost-free money, especially on 15 year fixed rate mortgages. Down the road, 3% money will seem like a dream.

The only issue I have with the entire aftershock opinion of real estate is rental income. If I buy a property for $100k and it cash flows (after all expenses including maintenance) $500 a month, who cares if the value drops to $0? I can increase rents with inflation and pay off the loan with inflated dollars. But I can't find any mention of this from the aftershock crew.
http://www.financialsurvivalist.com

John,
We're not following trends here or aligning ourselves with this or that "expert." Our predictions come from a broader economic theory. We would publish the comprehensive theory now, but publishers are generally not interested in broad economic theories. We think interest will grow after more of our predictions come to pass.

The problem with predicting an upswing based on past economic declines is that our economy today is not the same as it was before or during the Great Depression, or in the late '70s. As we explain in our books, our economy is built on a series of bubbles, and all bubbles eventually pop.

Matthew,
Remember, this is no ordinary inflation we are talking about. With massive unemployment, we are unlikely to see nominal wages increase to keep up with inflation. You're right that real estate dollar values may go up, but the actual value will go down in inflation-adjusted dollars. However, Steve is right that if it is your primary residence and you plan on living there for a long time, owning with a fixed-rate mortgage may be a good option, especially because as inflation rises you will be paying it back with cheaper dollars. The key is to keep a low level of equity in the house.

When you say Real Estate has more to fall do you mean the real value or the dollar value, I ask since in the 70's/80's when inflation was double digits, real estate did quite well as an investment. Why wont it be the same this time?

Good question, Sean. This is different from the situation 30 years ago because we're dealing with a whole multi-bubble economy. Real estate dollar prices will actually go up due to inflation, but with fewer lenders, higher interest rates and high unemployment, lack of buyers will drive real values down in inflation-adjusted dollars. Commercial real estate is especially risky, as many tenants will stop paying rent they can't afford, and eviction will be difficult. Bottom line: if it's not your primary residence, now is a good time to get out.

Ok, so now does everyone get it...look at my post (first one) and I was calling this rally into the dogmatic bearishness of everyone here. Bottom Line, everyone needs to be careful in accepting Aftershock as fact because it looks like, and the facts are the market has started a new bull run and is well on it's way to cleaning all the bear's and doomsdayer's clocks right out! Get on board the train before you underperform and get dusted.....aftershock will probably take place from much higher levels down to right about here!!!!

You mention getting out of ARMs and into fixed rate mortgages. What about LIBOR-based mortgage loans? And with the feds saying rates will be low till at least 2013 when is the right time to move to fixed?

John,
Generally speaking we don't suggest putting too much stock (pardon the expression) into short-term upswings in the markets. In fact, we have been pointing out the possibility of an upswing due to government intervention and other factors for some time. Reports of a minor increase in growth for the last quarter and gains in the stock market do not change our recommendations.

Even mainstream voices have been reluctant to call this uptick a sign of real recovery, as it hasn't come with any real rise in jobs or personal income. And we already know what happens when consumer spending and private debt increases without an increase in income to support it.

That being said, we don't mind people being careful about accepting our warnings. Slowly moving out of stocks while they're peaking and gradually getting into gold as more and more evidence of a false recovery comes out is a perfectly fine strategy. Do your own research or just keep up with our updates and we'll let you know as things become more urgent.

LIBOR-based mortgages are not safe from higher interest rates. We can't really be assured of interest rates not increasing before 2013. Right now the Fed can print money in order to keep interest rates low, but when we begin to see heavy inflation (and it is already on the rise), their options will be limited. At any rate, it is very likely that we will see interest rates rise in 2013 or earlier, so moving to a fixed-rate mortgage soon would be a good idea.

What would you guys do? I owe $409K on a San Diego townhouse worth $350K today. I just moved to CO and won't move back to CA (ever!). My renters cover my mortgage with $270 per month extra income. The mortgage is 2% fixed rate for 5 years, then it goes up to 3%, 4%, then fixed at 5% for the next 35 years. (The loan was just modified January 2010). Should I short-sell now and bail out? I am having trouble understanding what inflation-adjusted dollars mean. Will I be able to get more rent from my renters in the near future due to inflation and enjoy the fixed-rate loan? What does the Aftershock Team think will happen to a San Diego townhouse that currently rents for $2K a month in 2016? How much will rent be then? It may be worth it to keep it...or is this too risky since right now I don't have much of a cushion?

The authors have a very narrow view at looking at real estate. They are only looking at what the value of real estate will be in the future and because they see it coming down suggest renting rather than buying. This is absurd!! The opportunity to buy real estate now at an incredibly low interest rate for 30 years and rent that property out for a significant positive cash flow is huge. This is exactly what I am doing and in the last 2 years have purchased 3 investment homes and have each of them rented out bringing in $500 positive a month after paying my mortgage, taxes and insurance - that's an extra $1500 a month that I have added to my portfolio. It doesn't matter if the value of property goes up or down because my rental income is significant and will only increase in the future. In the future crash with more people losing their homes means more renters competing for my home, thus higher demand and thus higher rents. I'm very surprised that these authors/economists are recommending to not buy real estate.

Amy,
To understand inflation-adjusted dollars, imagine that in the near future your job pays twice as much as it does today. Sounds great, right? but then imagine that a bottle of soda costs $7, it costs $200 to fill your car with gas, and a typical trip to the grocery store runs you over $400. Suddenly those extra dollars in your checking account don't seem like so much. (Some jobs may keep up with inflation better than others, but with high unemployment and collapsed markets, most will consider themselves lucky to have a job at all.)

Considering this, you have to wonder if your renters will both retain employment and be able to pay higher rental rates to account for inflation. If not, don't expect eviction to be easy in a backlogged court system. And even after eviction, finding renters to pay higher prices won't be easy.

We can't give specific investment advice about your situation in this forum, but you may be interested in our private consulting service. The link is at the top of this page. Thanks.

Jon,
Hopefully our answer to Amy above addresses your concern. Even with high foreclosures, it will be a long, slow process getting so many people out of their homes, and ultimately they can only turn to places they can afford. In the meantime, it will be just as troublesome evicting renters who can't afford to pay higher rents (or any rent for that matter).

Your comment is key - "they can only turn to places they can afford." I'm finding properties that are very affordable and people will have to live somewhere. Imagine the huge numbers of renters out there because they lost their homes. You have to do your due diligence in finding good teneants - believe me they are out there even ones who have lost their homes. To advise not to buy real estate at this time is missing on a huge opportunity.

You're right, Jon. It's possible to make it work. Our advice has to be generalized in this forum, and for most people commercial real estate is a big risk, especially considering that there will be plenty of great bargains available after the remaining bubbles burst.

After reading your book I am wondering what I should be doing with my childrens 529 accounts. One child will be moving to college in 3 years and another in seven.
Should I cash them in and buy gold?
Regards

Jon,
You cannot assume that those rents you are receiving today will be there in the future if there is a real crisis. For example, during the Great Depression, collection of rents went way down.

My rents today are $1250 a month. My payment is $697 including PITI. I can drop my rent $550 and still break even. Do you think a very nice 3 bedroom/2bath home is going to drop below $697? I& 39;ll take that risk anyday. We are in a perfect storm of opportunity. Prices of homes in many parts of the country are rock bottom, interest rates are at there lowest levels in decades, and the rental market is strong - this is a scenario for people to actually create wealth. When most people are scared you can bet that an opportunity is waiting.

Jon,
Well, then good luck to you. I wish you well.

Joseph,
In the short term, 529 plans should be okay. In the long term, it depends whether they're savings or prepaid. Savings, which are invested, will take a big hit when the dollar bubble bursts and the markets crash. Prepaid 529 plans, where you pay for tuition credits at today's rates, are the safer of the two options, at least for in-state tuition. Be sure to check the terms of the plan to make sure you're safeguarded against market crashes, inflation, and state bankruptcy.

Julian,

Though rents may go down, Joseph can aslo barter. In the meantime inflation will make it easier for him to pay the mortgage. Because of inflation it's not like he needs $697/1250 to keep the property. It's more like $300/1250 (depending on the rate of inflation). Especially if he has the proper reserves invested in the proper places, Joseph will make money if "Aftershock" is wrong or right. I think they are right though.
www.financialsurvivalist.com

I am like Amy, "I am having trouble understanding what inflation-adjusted dollars mean" - but your explanation was helpful. But still, how can home prices go down more if we have inflation around the corner? I think I need more of these type of explanation. I keep reading dollar bubble - but I see the dollar as depressed ( especially against the Euro) and I think it is at 80% of world currency as a whole. So, where is the dollar bubble? Thank you.

Hi Linda,
Real estate *dollar prices* will go up due to inflation, but real values will go down dramatically due to higher interest rates and high unemployment. (Lack of income means less ability to buy, and high interest rates means less money available for principal investment.)

To repeat Milton Friedman's line, "Inflation is always and everywhere a monetary phenomenon." The reason inflation is coming for the dollar is because the money supply has increased at an unprecedented rate, and the situation is significantly worse because of our stagnant economy.

With interest rates at an all-time low, and housing prices seemingly near or at bottom, is the Aftershock Team recommending that people wait until interest rates and home prices go up, to buy a house?

Won't some of the savings resulting from the drop in value be lost to the higher interest payments, in the event that home buyer's need to finance?

Will financing still be a reasonable option for real-estate purchases, once the Aftershock hits? Or, would the only beneficiaries of the Aftershock be investors who can afford to put large down-payments towards real-estate investments?

-Chris

Not exactly, Chris. A long-term fixed-rate mortgage for a home you plan on living in for the next 10 to 20 years can be a good deal. You'd be paying off the mortgage with cheaper and cheaper dollars over time. But as you point out, those who have protected themselves will be able to take advantage of dramatically lower real estate values (even if the dollar prices are higher) by making larger principal investments.

Everyone's situation is different, so we can't give specific advice here. As always, we recommend considering your plans and all the factors involved, and consulting with your financial advisor before making decisions.

Dear Aftershock Team,

I appreciate your getting back to me so quickly. Thanks for the insight!

-Chris

I get the concerns you share about the impact of more bubbles popping in the next 3-5 years and your advice to bail out of real estate due to much higher anticipated mortgage rates. But what if you can buy dirt cheap rentals now at lowest prices ever and do that with cash. Wouldn't ROI be higher than many other investments - even after the bust - if you bought a 3 BR 2 BA for say $50,000 and could rent it for $1200 a month? That would be an income stream of nearly 30% and would likely net a 20% ROI year after year - even if rents don't go up. It seems to me being into debt free residential rental properties would be a good hedge for the coming disaster - especially if most people have to rent because they cant afford to buy any longer as rates go up and lenders tighten lending more and more. What am I missing?

Hi John,
We're not going to say categorically that no one should buy real estate. But it's risky to make assumptions about rental prices even staying the same. If a tenant loses their job and has to choose between paying rent or feeding their family, the choice will be obvious. Tenant courts will be backed up with endless cases like this and won't be able to deliver evictions in a timely manner (nor will it be politically desirable to do so in a post-Aftershock environment). In the meantime, expenses will go up with inflation regardless of what (or whether) tenants are paying.

Again, we can't say to everyone across the board that it's the wrong thing to do, but consider the risks before making a decision.

I don& 39;t understand why people don& 39;t get it !

Today you buy a depressed property let say for 160.000 USD = 100 ounce of Gold at todays price of 1.600 of Gold.

After the Dollar bubble bursts and the inflation hits this house may cost 260.000 USD = 32,5 ounce of Gold at future Gold price of 8.000 USD.
What if Gold costs not just 8.000 but 26.000 $/ounce ?

Buy the Gold and Silver bubble !
Real estate is NOT a good investment ! Only in case of a perfect timing just at the start of a new real estate bubble.

Greatings !

Not everythig simple is good, butt ALL good things are simple.

The real estate trend did not take genius to predict. Anyone who had been in the mortgage business for more than a decade could have predicted it. First - NEVER had anyone ever asked me as a lender "Can I borrow more than my budget will allow?" The conversation was usually one in which a realtor and/or loan officer convinced borrowers as financial professionals. The only way to fix this mess is by correcting the "artificial" dollars in the system. The problem is determining who has those dollars and creating a fair method to extract them.

We currently own a home in Virgina and California. Our plan is to move back to California in 18 months and sell our house in Virginia. Depending on the market, we would either move back into our Calif house and refi (now 5.75% as an invest property) as a primary or also sell it.
Do you think the timing would still support selling both houses or moving in and refi'ing the Calif house?

Hi Rich,
We generally only recommend hanging onto a primary residence (with a fixed rate mortgage) if you plan on living there for 10 to 20 years. As we've said, this can be a very good deal, since you'd be paying off the mortgage with cheaper and cheaper dollars over time.

It will become more difficult to sell real estate as we get closer to the Aftershock, and when interest rates and unemployment skyrocket it will destroy the value. So if you are planning on selling any time soon, we'd say now is the time.

John R. & Jon:

Real estate is a function of rents. Rents are a function of income. Income is a function of jobs. When owning rental properties, the main thing is to understand the risks.

If you are able to buy a 3/2 house for $50K, there is a reason for it. The main thing to consider (assuming the crisis prediction is right) is whether there will still be jobs in your properties' neighborhoods in the aftershock. If there's no jobs, you'll still be stuck with taxes, maintenance, and insurance, no matter how low your payments seem now.

To Jon,
I have been reading your view on rental properties.I have a similar situation and make very nice cash flow, with mostly employed tenants in SoCal.The multi units will likely hold their own as far as cost goes simply because they have more rents covering one cost. However, I have sfr that the Tenant has lost his job an as a result I am eating an $2300 total PITI monthy. And It is and will be hard to find Tenants who are willing to pay that. The MFR is a less risky investment. At this time the prices of MFR has gone up, and the opposite for the SFR, I think that SFR is not a secure investment at this time even if prices are low.

I'd be interested to know people's thoughts about the near-term trend in single family or multi-family prices. Will the banks release the foreclosures they are holding into the market, thereby driving down prices, or will they capitalize and eat the losses and reduce their taxes and other costs? In other words, how likely is it that prices will drop further from here?

Severely depressed real estate prices continue to be a concern for investors. For some perspective on the magnitude of the decline in home prices, today's chart presents the median single-family home price divided by the price of one ounce of gold. This results in the home / gold ratio or the cost of the median single-family home in ounces of gold. For example, it currently takes a relatively low 105 ounces of gold to buy the median single-family home. This is dramatically less than the 601 ounces it took back in 2001. When priced in gold, the median single-family home is down over 80% from its 2001 peak, remains well within the confines of a six-year accelerated downtrend and remains very near its 1980 trough.
http://www.chartoftheday.com/20120127.htm?T

“Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall. Weakness was seen as 19 of 20 cities saw average home prices decline in November over October,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “The only positive for
the month was Phoenix, one of the hardest hit in recent years. Annual rates were little better as 18 cities and both Composites were negative. Nationally, home prices are lower than a year ago. The 10-City Composite was down 3.6% and the 20-City was down 3.7% compared to November 2010. The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand... From their 2006 peaks, both Composites are down close to 33% through
November.

www.standardandpoors.com/spf/docs/case-shiller/CSHomePrice_Release_013118.pdf

I can see paying with cheap $ to mortgage of the primary residence. What about buying a home you will be living with cash? Or buy later?

Jen,
We generally don't recommend buying right now unless you plan on living in a home for a long time, and in that case to do so with a fixed-rate mortgage. In most cases, we think cash would be better invested elsewhere.

I understand the problems with buying real estate now. I assume that caution also applies to REITs?

Absolutely, Jim, especially when real estate gets hit across the board.

I am trying to figure out how will I sell my gold bullion if gold gets to $4,000 or even $5,000 ?

I am a Canadian and trying to decide what to do with principle residence and also vacation home in Arizona. Retiring next year - seems like selling both and renting is the answer, but not sure. Home values have not decreased in Canada as in the US - but expect they are due for a correction. Can lock in here with a good interest rate for 5 years or sell. US property is paid for and worth 1/2 of the value of the property here. Trying to decide whether it would be better to sell it as well, renting instead. Will the Canadian dollar make it easier to keep the residence (off set the inflated expenses)? I know you recommend selling and renting - then buying back later - but not sure if this would apply to a Canadian on a fixed income as well.
Enjoying the book, but getting confused!

Rob,
The higher the price goes, the more demand there is. Particularly with a limited supply and rising demand, selling will be easier than buying.

Deb,
We can't give specific investment advice in this forum, but generally speaking we see long-term, fixed-rate mortgages with low equity to be a good deal as long as it is a primary residence you plan on living in for a long time (10-20 years) — one loses little wealth in the crash and can pay off the mortgage with cheaper and cheaper dollars due to inflation. Vacation homes are more of a personal decision, but generally we'd say there are better places to invest and there will likely be plenty of better deals after the real estate bubble pops.

Hope this helps. If you require more personal assistance, you may be interested in one of our services listed at the top of the page.

I am trying to understand how the price of a house with a fixed rate will be cheaper. My main concern has to do with taxes. Being that 50%+ of people will be unemployed, underemployed, or not receiving a salary adjusted for inflation, how are the local, state, and federal governments going to keep basic services going? My perception is that they will have to increase taxes to do so. Do you anticipate property taxes going up with inflation? Or will they be tied to the value of properties, which will be down given the high availability of foreclosures?

Thanks,

Frank

Hi Frank,
Property taxes may go up somewhat, but they will be very difficult to collect in a post-Aftershock environment. Tax hikes will likely be much more concentrated in income and sales taxes.

I have a primary residence that I've had for 9yrs fixed at 30y/6%, near where we both work in Medicine and Education in So.Cal, I can pay it off in about two years with 250k owed. If I sold I might get 550k with realtor. I am considering renting it with in 5years when I move out of Calif. Is this a reasonable way of thinking?

Rob,
See our caveats earlier in this thread about owning rental real estate. There's no one-size-fits-all recommendation, but it's good to be aware of the potential issues.

My house is on the market and we are trying to sell. One of my concerns about renting is that the price of a monthly rental will skyrocket as inflation increases. Is it better to rent or buy a small home with a fixed mortgage rate that won't go up?

David,
Generally speaking, for a primary residence, a long-term fixed-rate mortgage with low equity can be a good deal in the long run (as long as you plan on keeping it that long), as payments become easier and easier to make over time due to inflation. The caveat is that there may be a period of a few years when the value has crashed and inflation hasn't taken its full effect, and payments may be difficult to make.

The advantage of renting, of course, is that renters are not financially on the hook for the property's value (or lack thereof), and eviction will be difficult in a post-crash environment. (This last part is true in the case of foreclosure too.)

I am selling my house and have the opportunity to buy a smaller house pay cash but it is in a 55 community that requires you to pay lot rent it this the best way to invest my cash this is the the best I can do with out getting into another mortage payment but will have a lot rent. Thanks

Chart of the Day
For some perspective on the all-important US real estate market, today's chart illustrates the inflation-adjusted median price of a single-family home in the United States over the past 42 years. Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased -- increased. That brings us to today's chart which illustrates how the inflation-adjusted median home price is currently 42% off its 2005 peak. That's a $112,000 drop. In fact, a home buyer who bought the median priced single-family home at the 1979 peak has actually seen that home lose value (13.7% loss). Not an impressive performance considering that more than three decades have passed. It is worth noting that the median priced home is currently at the bottom of a price range that existed from the late 1970s into the mid-1990s.
http://www.chartoftheday.com/20120316.htm?T

I bought some real estate investment books back in the early 2000's mostly out of feeling as though I was missing out on the tremendous gains and even more so because I actually felt irresponsible for not being involved with real estate (what a joke). Taking advice from the "experts" in the books that I was read at the time I financed a 2 family prop, sale price $192,500 with $10K down. The mtg was a 5/1 ARM with a 1st and 2nd mtg (2nd is a 10 yr balloon for $28K). This was in 2006 so I'm sure you can see the trouble I'm in. The note was not backed by Freddie/Fannie and it's personally backed (not in a business). I've made all the pmts on time, I have great credit (780 score) but the prop’s under water to the tune of $40K. I have tried 101 ways to get just the 1st this mtg re-fi'd but no one will touch it because I'm not in trouble (yet). Does anyone have any suggestions on how I can protect myself and family from this ticking time bomb?

Maryann,
We're not really sure about lot rents in this context. Generally speaking, renting and keeping low equity in real estate is a sound strategy for now. That's about as much as we can say with this information.

Kot47,
It's a tough situation. We have some advice on this on pages 168-69 in Aftershock 2nd Edition. If you require more assistance, you may be interested in a personal consulting session. (Link at the top of the page.)

Kot 47: this sounds totally backwards but I just got a loan modification BECAUSE I was 60 days late in paying my mortgage to BofA. I actually had to screw up before I got my reward. It's pathetic that in this day and age we get rewarded for bad behavior, but "they" are making the rules so I took advantage. They wouldn't give me the time of day until I went behind on payments. It's a risk you have to take. I was ready mentally to walk from my property and it luckily turned out well for me. 2% fixed for 5 years on a 40 year term, then slowly sliding to 5% fixed @ year 8 forever. I also wrote off $48,500 in a Citibank 2nd mortgage for $3K to Citi, $2K to a guy who knows the right people at Citi. Again, I was 60 days late before either company would give me the time of day. I think crying on the phone helped too! Pathetic.

I'm not sure if you can help, but-
My son lives in the UK, Scotland.
He's looking into purchasing a house; what's the climate like there? I've asked that he look into the markets there, but he's being told that home prices will start to rise within the next year, so of course he's looking to get in on the bottom.
My thinking is similar to the US situation, or is it?

G. Golden,
Yes, we expect the UK and its real estate market to get hit pretty hard by the Aftershock, especially as its economy is very dependent on the rest of Europe. We wouldn't say real estate there has hit bottom—though it may rise somewhat in the short term.

I have 100K cash... currently renting. Would you suggest putting all the cash into gold and silver and wait to purchase, or a low down payment on a modest home to live in for the long term and the rest in gold???

Amy I am so glad to hear that it worked out for you and you are 100% correct that bad behavior seems to be what they reward and if that truly is the game that needs to be played these days then maybe that's the route I'll have to take too. It does stink though because I work hard, pay on time every single month and I didn't barrow more than I could afford but none of that seems to matter. Thanks for the comments and the details on your re-fi success story.

I hear you, read you and believe you. But, are we so done for that I will be left with no food or water after the collapse? In anticipation of this dire emergency, wouldn't it be best to grab a crappy mobile home on septic, well and 6 ac., simply for life preservation? If Aftershock truly anticipates an economic collapse of great magnitude, anyone living in an apartment is totally effed! I think buying land with bare necessities should trip all other ideals in this case. What say ye fellow preppers?

I have been unable to find any commentary/opinions for those who own their homes -- the mortgage is paid off. We have been in our home 11 years and have no plans to move. Would taking out a home equity loan at the currently low interest rates be a financial move to consider as a way to have cash on hand?