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Using the most expensive cities in the country for comparison is unrealistic, there are far more affordable communities to get into the housing market while maintaining a career, or build a resume. It is also narrow minded of the author to think that everyone would want to live in megalopolis, as he does.
Not sure if this question belongs on this thread, but can anyone tell me how middle-range houses (say, $200k to $500k, depending on area) can keep increasing when the middle class keeps decreasing?
We will be selling our home (current appraisal, $350k) in about 3-5 years, and I am not sure who will be able to want to buy it and be able to afford it then. (Just FYI, we live in the Denver metro area.)
Last edited by katharsis; 05-23-2015 at 10:26 AM..
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,585 posts, read 81,260,275 times
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Areas (such as here) where home prices are unaffordable for many are not that way because of a bubble, this time. It's simply supply and demand. More people are coming to live here than ever, and bringing cash with them either from equity in their old state or from another country. With a lot of competition for the homes in the low crime areas with good schools, many offers come in over asking price and many are cash. That drives up the prices. Higher interest rates make little difference to people that can pay $600,000+ cash or have a big down payment, especially since mortgage interest is tax deductible.
So you think raising interest rates will make buying a home easier?
With prices high enough, interest rates don't matter much. You can rent and invest the difference in the stock markets, but you won't be able to buy until you have accumulated nearly the whole amount anyway, so interest rates don't matter.
If prices were lower, you'd be able to pay cash when the portfolio value exceeds the housing price. If you don't borrow money, interest rates are irrelevant.
Whatever the market is for your house 3, 4, 5 or 6 years from now there will be buyers who qualify.
If the housing market collapses, so does the economy. Been there, done that.
And after the last collapse it did not lead to another great depression.
America bails out the banks, America bails out the auto companies. If we don't have it we just print more money and create more debt to pay for it. It's in the interest of the world for America's economy to not fail.
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