Real estate, market

REASONS I LIKE THE REAL ESTATE MARKET

Counting thru the gate

It comes as no surprise that a real estate site is going to believe real estate is one of the best investments out there, but here are my reasons:

1. The government is printing money like never before. My understanding is that the last time money was printed like this was in the 60’s and 70’s. It seems to me that sooner or later we have to have an inflationary economy, and inflation means that your dollar is going to buy less in the future than it does now. The printing of money will also tend to make our dollar cheaper compared to the other nations currencies. To keep it as cash seems dangerous to me, because the government is printing cash everyday.

2. The Stock Market is probably good for a rebound, but depending what you buy the rebound will vary considerably. I believe the agricultural sector will be one of the fastest to rebound, as I’ll explain later. If we go to Wal-Mart or any retail store and look at the tags on clothing, toys, or most any consumer product, you will see an overseas manufacturing label on American brand name products. What this is going to mean is that as our businesses rebound they are going to carry the world economy up as well, because most of the products are made overseas. Of a typical consumer product bought at Wal-Mart, the only money that will stay in our economy is the retail markup, distribution and taxes. The actual cost of the product will be going to the country that made the product. I may be over simplifying it, but I think you get my drift.

Before the crash the world standard of living was rising faster than ours. These overseas people making the products for our market were more prosperous than ever before. In a lot of these countries a better living was defined first by eating better, not by having more consumer things, which is how we define a better lifestyle. Record high prices for our grains showed this.

Dryland Farming

3. This brings us to the agriculture sector. The one exception to the origin of products in Wal-Mart is the food sector. Our food also has a lot of imports, most of which are seasonal. For the most part we produce most of what we eat. If fact, we export enormous amounts of raw food, corn, wheat, soybeans, meats etc. As opposed to overseas, as times get better, our food spending will increase by eating out more rather than by eating a better source of protein. Mostly, we tend to reflect a better economy by increasing our consumer spending. As times get better for companies in the Stock Market, they, in turn, make things better for the overseas economy as fast or faster than they do for ours. Those people working overseas are going to show their better lifestyle by eating better, largely on raw foodstuffs coming from us, along with other food exporting nations (manufacturing nations and food exporting nation tend to be different). This increase in demand will be helped along by our present monetary policies making our Dollar worth less than other currencies. This means a stronger Yen or Euro will make our food seem cheaper to them making more demand for those foods and making the price for food in our country higher.

Wheat Harvest

Those are the financial reasons I believe real estate is a good investment, especially agricultural real estate. When we add in the satisfaction of being part of something bigger, such as being part of a sustainable agricultural landscape, I can’t help but get excited. The housing and recreational markets have taken a big hit and I believe are good buying opportunities also, but for me the future is in Agriculture.

These opinions are those of Robert Fritz and do not in anyway reflect those of Prudential Montana or anyone associated with Prudential Montana.