Oil & Real-estate prices

I think oil is finally going to come down with some increases on certain days but overall its heading back for a normal price. The oil producers definitely want to see it come down at least to a $100. The higher oil price goes the best oil producers are off in the short term but worst off in the long term as the high price is incentivizing the oil consumers to come up faster with alternative energy.

In terms of real estate i am pretty skeptical - dont think there will be a recovery in the coming year - i think there's still lots to be recovered. Bank are definitely not lending at this stage which has basically put the real estate market on freeze. Prices have been sky high due to high leverage that was provided by the banks over the past few years which allowed many real estat investors to achieve high leveraged retuen even though their yield on the real estate was as low as 4-5%

I think all this is an overdue sanity check for the market and for society.
Californians for example, saw their property value increase 300% in 10 years.. anyone who banked on this and started spending like a millionaire got what he deserved.
I agree with andy, don't bet on real estate quite yet. As we heard merrill lynch just found another 5 billion in worthless debts, the shake up ain't over yet.

I hear estimates from several sources, including what andy wrote here that oil will return to around $100/barrel. Seems to me like an airlines play could be good as they have taken a huge hit by rising oil prices and can renounce nicely if oil drops to lower levels.

i agree with andy on the oil... i think it will drop to 100$ if not any lower.

speaking of Merrill Blacktuna, today Deutsche Bank announced 11 billion USD in write downs...Many of the banks who up to now pretended they were not affected by the credit crisis our coming out with

I think by the end of this year we will see oil between $95 and $100 a barrel, however its still got a long way to go before that, 120 needs to be broken, when it does there is very little support between 116 and 120 my guess is once it breaks 120 it will very quickly drop to 116. Other than that I would say in the short term oil is oversold at current prices was looking for a rally to 128-132 the other day 127ish may be as high as the rally will go but I still remain sceptical until we break through 120. lol even though I’ve said all of this couldn’t resist taking a long position on bp lol just think its going to bounce off $60 like it has for the past 4 years , looking to sell somewhere between 66 my low and 75 my high. 5.6% ex dividend on the 13th august.

I couldn't resist the XOM Jan '09 $70 Calls. We've got massive profits and a 52 week low..... go figure.

I see oil at $200 a barrel within the next year or so, with some pretty wild swings up and down in the interim. Buy on the dips and you will do well.

Real estate is at least a decade away from recovering. All the developments started years ago during the peak of the market are just being finished now; add the the record foreclosures to that and RE is going to seem like a bottomless pit for a *long* time.

The only way to make money on RE at the moment is to buy the non-performing paper off the banks for pennies on the dollar and then either work out a deal with the occupant or kick 'em out and flip the property. This is game for the well-capitalized only; as nobody is going to lend you the cash to be a RE speculator now.

im guessing on a slow decline in oil expecting it to level out at $95-100 a barrel by end of this year and just hold there for a good while. that said there will be a few more rallies to come but i dont think we will see any more major upmoves, i.e i doubt we will see 145 being passed for a good few years yet !

There is no real growth in oil consumption - the only thing is the fear that there won't be enough oil for all population in the future. This doesn't explain 500% growth in oil price.

As I see it, the market cannot stand oil barrel price over $100 for too long. It will cause severe crisis and potential wars, so I think at the long term the current situation will make us understand we must use more clean, green and renewable energy sources.

V4Vendetta -

You're wrong on all fronts.

Regarding Oil: At $140+, demand began tapering off. Americans, for the first time in 50 years, have actually reduced their driving. That makes up for 70% of all of our oil usage, and we make up 25% of the globe. Now, it certainly cannot only be Americans that are feeling the pinch. China AND India both removed some subsidies, passing the real cost of oil on to the end user. ramigabai is right that oil consumption has NOT been skyrocketing at all, and is in fact rather flat at the moment. From what I have read, the "real" price of oil should be somewhere between $90 and $110. Even if you think we're going to have horrible inflation, and we might, that takes us to $120 tops. Of course it could exceed that - it just did. But the target would still remain around $120 despite any speculation beyond that.

Regarding RE: I'm wondering if you have any idea what the government has just done in regards to FNE and FRE. They've essentially created a blank check.....a bailout of mortgages at the taxpayer's expense. What we will see is simple: A stablization of real estate prices at the EXPENSE of rampant inflation. They'll keep rates low and pump an extra $1T into the economy that will give us 10%+ real inflation. Many more people will be able to stay in their homes which will lead to a flat (not longer declining) real estate market. In exchange for this benefit, we will have to pay higher prices on everything else (yes oil too).

Your comment that "the only way to make money on RE at the moment..." is quite naive. You don't have to be a "speculator" to make money in real estate. There is such a thing as buying a property for a good price in an undervalued market, collecting rents, and getting a 35%+ ROI with leveraging. Your comment suggests to me that you live in a very overvalued area like Miami, Los Angeles, Phoenix, etc. There are over 300 distinct RE markets in the U.S., and not all of them are suffering at the moment despite what the media would try to have everyone believe. I have properties in many different cities that have actually shown appreciation in the past two years. What's more, is people are still able to acquire these properties with 90% financing. Your comment that "no one is going to lend you the cash...." is just plain wrong. The bank doesn't ask if you're "speculating".....the bank does an appraisal, looks at your credit, and checks out your income. That's what's used to qualify a borrower, and that borrower does not have to "speculate" to turn a profit.