Bank of America Make up your Mind!
May 13, 2011

Allow me to prove yet again that no one really knows where housing is going in the short and medium term.  Bank of America, one of the largest mortgage lenders in the country said it sees a rosy outlook for real estate prices. They further stated they will be able to limit loan losses sooner than most analysts had predicted. Considering the bank’s chief economist has a different opinion as of April, this news today makes me wonder.

Is this careful real estate analysis that includes all of the relevant facts including shadow inventory?  Or (more likely) were these statements motivated by a lender who is looking to create a sense of optimism for its stock price?

With all the recent debate in the real estate world regarding double dips or if we hit bottom, it seems that the same people have a different opinion every day. The easy part is trying to predict where prices are going, because everyone on any given day will be right or for that matter wrong. It all depends on which newspaper you read that day. The hard part is having the intestinal fortitude to go out there and make an investment.  That is the key to success for so many wealthy individuals; taking action when the pundits say not to.  My experience tells me the pundits are often wrong.

I’m guessing half of these pundits who are banging the table stating that renting is better than owning are all the aspiring landlords. When I was a kid growing up my dad made it clear to me: “Don’t be a fool , save your money and buy your house.” Don’t make another man rich was his attitude. Today people starting out have an opportunity of a life time. To build equity from these levels will be a great gift. Housing prices WILL go up.  No one can predict for sure when, but it’s likely we won’t even recognize it until we have lots of equity and those who bought will sit back and say “I told you so.”

Case in point: no one knows where real estate prices are going in the short or medium term - BUT I KNOW where it goes long term… the same place as always. UP!

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