Similarity between Housing and Metals?

[Brian4Liberty]

There seems to be an interesting parallel between the housing and metals markets. As the price declines, many ordinary people will refuse to take a loss, thus sales (of physical metal and houses) slow down or stop. People will be stubborn, and just refuse to sell...might explain some of the problems in trying to buy physical silver right now. (Not that the odds of a quick upturn are the same for housing as it is for the metals...)

"I'm not selling my $800K house for $700k, and I'm not selling my $18 Silver Eagle for $12.70..."

 

[JosephTheLibertarian]

"I'm not selling my $800K house for $700k, and I'm not selling my $18 Silver Eagle for $12.70..."

Why not? I'll buy it

 

[Brian4Liberty]

Why not? I'll buy it

Not selling the Eagles, but I'll sell you shares of SLV for $20/share.

 

[jonahtrainer]

There seems to be an interesting parallel between the housing and metals markets. As the price declines, many ordinary people will refuse to take a loss, thus sales (of physical metal and houses) slow down or stop. People will be stubborn, and just refuse to sell...might explain some of the problems in trying to buy physical silver right now. (Not that the odds of a quick upturn are the same for housing as it is for the metals...)

"I'm not selling my $800K house for $700k, and I'm not selling my $18 Silver Eagle for $12.70..."

There is a big difference when the underlying asset has no accompanying debt. 40,000 Silver Eagles, paid for, is a whole lot different than a $800k house with $750k mortgage. Real estate is almost always a negative cash-flow asset (there are very few allodial title properties) as even if it is completely paid for property tax, insurance, etc. are negative cash-flows that are still required. On the other hand, precious metals are not negative cash-flow unless stored at a 3rd party vault but even then the storage fees are immaterial.

Also, just because the price of silver is $12.70 does not mean there is any supply available. Take a read of No Sausage.

 

[Acala]

?

I was not aware that the housing market dried up. In fact, I think just the opposite has been true since the housing price downturn - housing inventories have skyrocketed. People have been trying to sell, although they have understandably resisted the fall in prices and, as another poster said, the housing market is debt-driven.

 

[Brian4Liberty]

There is a big difference when the underlying asset has no accompanying debt. 40,000 Silver Eagles, paid for, is a whole lot different than a $800k house with $750k mortgage.

What? You mean you didn't borrow $1 million dollars (interest only, no money down, no income) to buy gold at $1k/oz?

 

[Brian4Liberty]

I was not aware that the housing market dried up. In fact, I think just the opposite has been true since the housing price downturn - housing inventories have skyrocketed. People have been trying to sell, although they have understandably resisted the fall in prices and, as another poster said, the housing market is debt-driven.

Of course it depends on the location, but the fact that the inventory is so high means that people are "refusing" to sell (by lowering their price). What is the real difference if my house is on the market at a price that will never sell, and not having it on the market at all?

You may not be able to buy silver at $12.70, but if you offer more ($18?), some inventory may magically appear...