Does anyone see the logic of this? (debt, mortgages, sell)

[tallrick]

Since the 80's I have noticed that factories and farms have been replaced with retail space and housing. We know that housing does not generate wealth, yet it continues to inscrease in selling prices. Retail gets its income by raising prices of goods it handles. basically every piece of land developed now is either to house the consumers or sell them stuff. The stuff itself comes from another part of the world. Lots of the stuff is sold at prices that people cannot afford to pay all at once, so they go into debt to take possession. The money itself is simply debt and has a value that decreases with time. If nothing of value is being produced, how can this continue? If we rely on the rest of the world for our merchandise, what keeps them from saying good-bye to the dollar and running their own economy right at home? Will we ever see the end of high priced residential and retail space?

[pghquest]

Originally Posted by tallrick

Since the 80's I have noticed that factories and farms have been replaced with retail space and housing. We know that housing does not generate wealth, yet it continues to inscrease in selling prices. Retail gets its income by raising prices of goods it handles. basically every piece of land developed now is either to house the consumers or sell them stuff. The stuff itself comes from another part of the world. Lots of the stuff is sold at prices that people cannot afford to pay all at once, so they go into debt to take possession. The money itself is simply debt and has a value that decreases with time. If nothing of value is being produced, how can this continue? If we rely on the rest of the world for our merchandise, what keeps them from saying good-bye to the dollar and running their own economy right at home? Will we ever see the end of high priced residential and retail space?

Actually these people have been generating wealth using housing.

Example.. A warehouse space might rent out for $5 per foot, meaning a 20,000 sf will generate $100,000 a year in income. With mortgages, utilities, taxes etc, an owner might make $40,000 a year.

Turn it into housing and a 20,000 sf property would turn into 10-20 condos, selling them at $200,000 each. Add in the expenses to renovate, the removal of liability of taxes, utilities, any vacancy rate, and an owner could make more money by subdividing a building and selling it off then they would by selling it or continuing to rent it. Especially considering that a lot of warehouses are sitting vacant.