Real estate to crash with biblical dimensions!

Real estate: to crash with biblical dimensions?

Real estate has often been (Napoleon, Germany) a DANGEROUS TRAP!

After the real estate market crash in 1923, Germany had no real estate market until 1954.

In real estate, the venom sits in the tail. It is indeed a truth like a cow that “if the real estate and the construction sector are prospering,” the economy is also doing well. The equally great truth is that once the economy suffers, the real estate sector falls into a deep pit for many years.

Undoubtedly, the real estate sector has done well in recent years. For decades, this was a source of well-being and progress. Since 1954, real estate prices have continued to rise in the Western world, especially when expressed in fiat money. Few have noticed that over that period, prices rose along with wages, and wages rose under pressure from inflation (index adjustments) also rose. [note that real estate prices did not rise when expressed in real money]

In other words, during the first decades, the average price increase of an average home kept pace with the average wage increase of citizens. However, the last 7 to 10 years are an exception to this finding. Especially since the inflation index was seriously manipulated during this period. As a result, the average income of citizens has not gone up proportionally compared to real estate. This results in a severely overvalued real estate sector.

From a ratio of 16 to 80! 1970, the average wage was €200 to €300 (bef. 8,000 to bef. 12,000 or 440 to 660 guilders). You could buy a house for €3,500 to 4,000€. The ratio was 16. With a net wage of €3,000 in 2020-24, it becomes very stressful as people have to pay up to 250,000€ for a flat of less than 100m2. The ratio is now 80! Conclusion: the average price of the property has become is VERY EXPENSIVE. This indicates we should expect a dramatic price drop in American, Canadian, Belgian, and Dutch real estate.

Several factors show that the real estate supply continues to increase, not only because of new construction but also because the baby boomers are increasingly swapping their older and larger homes for smaller apartments. Add to this the fact that many properties must be sold to pay the inheritance tax on the death of the baby boomers, and government regulations make it more expensive to maintain a property.

The COVID crisis will also contribute to the coming real estate crash.  Many AirBnB, Gites, and Chambres d'hôtes can no longer pay their maintenance expenses and mortgage charges and are forced to sell. Hotels are also increasingly in serious trouble and have to sell. Shopping Centers come in a situation where the rent they receive for their stores is no longer paid because more and more shops close down and/or go bankrupt. Therefore, the Shopping Centers can no longer keep their obligations and go bankrupt. People who bought a property with a mortgage lose their jobs and can no longer honor it. Because of the COVID crisis, many citizens have become very uncertain about their employment. Insecure citizens do not buy real estate; they rent or stay with their parents. People fearing for their jobs also consume LESS.

"Unsecure citizens don't buy real estate!"

The demand for Real Estate keeps falling. In the past, under pressure from the tax authorities (CRS, FATCA, obligation to report second residencies), many wealthy citizens repatriated all their foreign funds/assets to their homeland and mainly reinvested these in real estate. Also, many citizens have invested most of their bank deposits (which, due to negative real interest rates, no longer yield anything) in real estate. This is now over.

"Wise citizens are selling all their properties now. Before the coming crash!"

Potential buyers who cannot afford a deposit no longer receive bank loans.  Today, banks only grant mortgages to people with STABLE JOBS (government officials, teachers, etc.) on condition the loan is guaranteed with additional Real Estate.  A mortgage guarantee no longer means that a credit is granted. Bankers are already in serious trouble (see update site 24 Nov 2020); they see the coming hurricane and do not want to be dragged deeper into the abyss during the expected crash.

Therefore, we already had a real estate BUY CLIMAX (especially in Belgium).  The same situation we had in 2006-07 in Florida (only those who won the promotor's lottery were allowed to buy a property) is now also seen in Belgium: buyers had to make an offer under closed cover, and the highest bidder got/bought the property!? People even buy based on photos without ever seeing the property. This clearly points to a classic BUY CLIMAX.  As history teaches, the coming real estate bear market will take about 33 years.

An excellent historical example is what happened to real estate in Cologne,  Germany.  Today's average German property prices are less overvalued because Germans learned lessons from the 1930-1950s. During the World Wars, many German civilians lost their homes as a result of bombing. Also, many people in Germany have learned their lessons from the Great Crisis of the 1920s and the Weimar Revolution. After the painful CRASH of the property market, it took until 1955 before any improvement.

"Just as Napoleon made good use of REAL ESTATE after the French Revolution, the German government did just the same and even more."

Napoleon confiscated all of the CHURCH's real estate to pay his debts and issued the Assignees with this collateral.  The Assignats paid France’s debts, and the certificates were used as MONEY. These Assignats became worthless after Napoleon returned the Church's belongings to the Pope. Interestingly enough, Napoleon continued to pay his soldiers with "Real money—GOLDEN NAPOLEONS." This is one of the main reasons he never had a shortage of soldiers.

" Three is a charm and 3 times in a row, the Germans became  Real Estate Losers."

As a result of the BIG DEPRESSION and the Great Wars of the 1920s-45s, Germany (like Belgium now) was completely ruined.  The German state was about to bankrupt, yet the country had to restore its finances. Just as Napoleon used REAL ESTATE after the French Revolution, the German government decided to do the same and even more.

Because Germany did not have records of the assets held by its citizens at that time (there were no computers, no Internet, bank secrecy, etc.), each citizen had to list his assets and send the paperwork to the government, the same as the Greeks were ordered to do a few years ago.

The German citizens were ordered to draw up a wealth statement themselves. The statement had to include all assets, not only real estate but also shares, art, money values, gold, silver, etc. Next, all private individuals had to pay 50% of the value as taxes. If this was not paid immediately, interest on the outstanding amount was also due.

"On their entire estate, the Germans had to pay a one-time tax of 50%. Their property served as a guarantee!"

Suddenly, ALL people's assets were taxed.  The tax, spread over 30 years, was guaranteed because the real estate that secured the tax could not be moved to another country and became almost unsaleable. It was BY LAW required to register the mortgage on the property, and if a citizen failed a payment or was unable to continue to honor the tax payments, the obligation was automatically converted into an active mortgage. The property was then sold, and the proceeds were paid to the German state.

Today, citizens no longer have to draw up a wealth list themselves. Thanks to computer science, CRS, FATCA, etc., it has become easy for the government to know every citizen's wealth.  For example, missing are the contents of a safe deposit box, assets abroad that are not in the citizen's name, etc. Thanks to digitization, a valuation can be implemented very quickly and easily.

A forced mortgage was registered on land and homes equal to 50% of the value (at a value above DM 5000).

That mortgage then had to be repaid in monthly repayments for the benefit of the state in the next 30 years.  Whoever stopped paying saw the hypotheses of power being converted. And then it was sold well for the benefit of the STATE.

Because you can’t possibly pick up your house and move it with it, it was dramatic for the purchasing power of the Germans.  This decision floored the German real estate sector for more than 30 years. Sales were practically impossible during that period. Worse still, it was impossible for a landlord to put tenants who could no longer pay the rent out of the property. By the fact that everything became more or less normal again and one could sell again, the premises were completely outdated.

Please note:

• An important difference with today is that the houses in 1952, after the war, had a very low value. The real estate sector is currently overvalued, and we have bubble prices. Should one be obliged to apply for that mortgage today, it would be at very high values, which would immediately collapse afterward.
• For many people, EMIGRATION is simply impossible because they have chained themselves to their homes with a mortgage.  In the event of default, as they (husband and wife) had to guarantee the loan with ALL THEIR ASSETS (including their salary), they may become 21st-century Slaves.

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