As January Goes, So Goes the Year?
I Certainly Hope NOT!!

There is a saying in the financial services industry (in which I used to be involved many years ago) that says that the stock market's performance in January sets the pace for the entire year. With the worst January performance by the US stock markets EVER (down over 8.5% for the month of January for both the S&P 500 and Dow Industrials indexes) it is a pretty good bet that the market will in fact be down for the year. Historically more than 70% of the time the ultimate direction of the market for the entire year is the same that it pursues during January. Since the small portion of our own retirement account that is not invested in Gatlinburg area real estate got hit pretty hard during January (again) I'm not feeling real optimistic about the balance of the year right now for that portion of our savings.

In contrast, our real estate investments have done pretty well overall during the past year. Since the value of Smoky Mountain real estate is not quoted in the newspaper daily it is a little harder to get a value on over a short period of time than that of the stock indexes. I do feel quite certain that with the enormous amount of borrowing the federal government is doing to try and create an economic stimulus (not a fan!) the ultimate outcome will be a return of inflation and that is good news for real asset type investments. Since gold and other precious metals are way above the level they were a couple of years ago it looks to me like investing in Sevier County real estate makes a lot of sense right now.

It is still possible to purchase rental real estate in the Gatlinburg/Pigeon Forge/Sevierville area that will produce a 10% return on investment if you are patient. A 10% gross return can cover our area's moderate insurance and exceedingly low taxes and still be a very attractive investment. With the likelihood that we will see serious inflation eventually, investing in real estate while it is historically cheap sounds like an attractive alternative. If you would like to learn about homes that can be purchased for less than 10 times their lease income please contact us!

Comments

Post a Comment

Popular posts from this blog

Everything You Always Wanted to Know about Smoky Mountain Water Wells but were Afraid to Ask!

Unlike more urban communities, many Smoky Mountain homes still have water supplied by individual underground wells. The fact is that only a relatively small (but ever growing) portion of our area is served by municipal utility water. This is rarely a problem as wells here in the Gatlinburg and surrounding area usually produce clear and good tasting water for significantly less cost than utility water once the one-time expense of drilling the well is covered. In fact, while there are certainly exceptions, our area is known for exceptionally clean and good tasting well water. More than one brand of bottled water is actually drawn from underground sources right here in the Smokies. What can go wrong you ask? Unfortunately, plenty! In those relatively rare cases where a well’s iron or sulfur content causes the water to be unsuitable, a water filtration system can generally be installed to remedy the situation. Water filtration can be as basic as a very inexpensive cotton string filter th
Read more

Comments Please!

I have had this blog since 2003 but didn't really get serious about regularly writing here until the beginning of 2007. I do truly enjoy the opportunity to share my thoughts about our local Gatlinburg area real estate market including the surrounding communities of Pigeon Forge, Sevierville, Seymour, Kodak, and Cosby. The only problem with writing any type of blog is that you really aren't sure just how many people are reading much less care about what you are pontificating about. If you are reading this blog, regularly or for the very first time, PLEASE comment me. It's easy, painless, and won't leave any sort of mark. In fact, you can even remain totally anonymous but yet let me know that you are out there. Like the age old question of "If a tree falls in the forest with nobody there to hear, does it make a noise?", a blog writer could wonder "If I write something meaningful but nobody reads it, does it matter?". If you like, you can even tel
Read more

Comments Please!!

Just wondering how many folks are out there reading this Gatlinburg real estate blog.  Please comment with your home town - You can even stay anonymous if you wish. If you want, tell me more about yourself (if you already own property in Sevier County or are just considering doing so, what you would like me to write about in the future, etc.).  Thanks in advance for your comments, whatever they might be!!
Read more