The Dystopians Dispense U.S. Real Estate Advice

This week's issue of The New Yorker features an article on The Dystopians, a growing class of American social theorists who think that the United  States and the entire way of life it represents is pretty much doomed.

When I say "doomed," I don't mean that the U.S. is in an economic downturn and persons in other countries who are poised to make the right financial moves can cash in big when it comes roaring back.

No, by "doomed" these guys mean, you know, DOOMED--As in, end of the world stuff. As in, vast urban wastelands populated by deer and raccoons. As in, the former populace clinging to the shore and the riverfront looking for boats that may have items for trade and barter.Looking for food. Drugs. Anything.

These guys are talking DARK AGES II, THE SEQUEL, only with American people and real estate.

While it's easy to dismiss these folks as nutcases, their numbers are steadily growing and many of them are well-educated and were formerly quite successful in the old world order (the one they believe is about to collapse). Dmitri Orlov, a successful software engineer who sold everything to buy and live on a boat, wrote a best-seller entitled, The New Age of Sail. In that book, Orlov lays out his belief that after the current social structure of the U.S. collapses, rivers and waterways will be the only habitable places, and people who own boats will be like kings. In fact, the only form of effective transport in that world will be boats, since travel over land will be near impossible and very dangerous.

James Howard Kuntsler, a devotee of Orlov and the author of the blog Clusterf*ck Nation, predicts that the suburbs will shortly become Mad Max-type wastelands occupied by nomads and drug lords and the cities will fall because the infrastructure needed to support them will crumble and never be replaced.

What does all this mean for the foreign investor?

For one thing, it means that you really need to understand that Americans are way more freaked out right now than you can possibly imagine, and it's likely to get worse in the coming years. This may or may not cause the world as we know it to collapse entirely, but it's definitely something to factor into your plans. You might want to take a peek at these authors just to get a sense of how dire some of the predictions really are.

It never hurts to be informed.

Secondly, more than usual, waterfront property is really worth considering now even if the cost is higher than some of the "bargains" to be had in the city. This is because, even in a Mad Max America, property on  a river or on the shore will appreciate. Even in a world with no money, waterfront property will be worth a lot.

There's a reason the first cities grew up around harbors and bends in major rivers.

Last but not least, you might want to hold off on suburban property unless you intend to inhabit it personally and are confident about your own self-sufficiency.

On a positive note, Kunstler also predicted that Y2K would be catatastrophic. He stands by that prediction, qualifying it only with the caveat that his timing might have been off, but the gist of it is not. Still, he was wrong once. He could very well be wrong a second time. It's possible.

For more general (and less extreme) tips on how to invest in American real estate, check out our article United States Real Estate Prospects for 2009.