Real Estate and the S&P Downgrade

Last Friday S&P downgraded the U.S’s credit rating from AAA to AA+  for the first time in history. Following the decision financial markets have been in turmoil as investors engage in a massive sell off that drove down the Dow Jones Industrial Average by as much as 600 points in just one trading day.

Americans are more worried than ever about the U.S. economy. With high unemployment and a debt situation that is getting worse every day, Americans are preparing for another financial crisis. As far as Real Estate is concerned, it is more of the same as distressed markets like Florida and California are still dealing with the aftermath of the Real Estate bubble.

The downgrade will have adverse consequences on the U.S. economy.  It’s likely that Real Estate will be one of the industries hit hardest by the current financial crisis.

Purchasing a home has become a liability for many Americans who wanted to take advantage of the American Dream. They over-leveraged themselves to the point of financial ruin. America is addicted to debt.  We borrowed too much money and now we are paying the price.   We must go back to the days of saving and building capital if we are going to see any sort of recovery. Purchasing a home with cash is the best option in this market environment. There are very few investment vehicles available that can protect your money in today’s economy.

Gold and Silver have made huge gains as investors look to assets that have real value. Purchasing a home can be a good investment if you look at it from the use you get out of it.  If it’s something you enjoy and provides a roof over your head, than it’s a worthwhile purchase. If on the other hand you use a mortgage and expect to sell the home in a few years, you might join the millions of Americans who got burned by the hysteria that was the Real Estate bubble.

Advertisements

~ by fnunez on August 9, 2011.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: