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Just one of the plus sides to living in a monkey-see-monkey-do world!
In the countries with the lowest of fertility rates, China, Japan and Korea, it's even more puzzling, unless with their surplus of housing, it makes it more affordable now for others to have 2nd homes in those countries.
There are those who are psychic enough to know when the next crash is coming, and they're the big-time winners. IMO, the real estate market is no different than the unpredictability of the stock market!
Having read Alan Greenspan's Memoirs, one of the top economists in the world, even he couldn't predict market booms and crashes!
What is not to understand. Huge drops in prices to point some couldn't be built near what was paid; low interest rates like never seen in our lifetime and fewer on the market as time went by from just so few being built over four year span. Europe is a mixed market from London where values never really went down to Spain that still has inventory from over building and still little credit. In US some tried to time the market and loss plain and simple.
What is not to understand. Few being built for four year span; people holding off in recession with cash; prices drop to record levels in decades; interest rates at lifetime lows. Only those who tried to time the market too close loss out or those who were never really prepared to buy. Europe is a mixed bag from UK where prices never really dropped; to Spain where prices are still cheap from over building and no credit still.
What is not to understand. Few being built for four year span; people holding off in recession with cash; prices drop to record levels in decades; interest rates at lifetime lows. Only those who tried to time the market too close loss out or those who were never really prepared to buy. Europe is a mixed bag from UK where prices never really dropped; to Spain where prices are still cheap from over building and no credit still.
Correct, I believe. Home prices are still depressed in many areas too. Having gone down about 25%, my house is still only worth about what I paid 15 years ago. Probably less after taking into account improvements and inflation. Not really seeing home price appreciation across the board.
So, prices are only rising in places where demand is outpacing supply. Or where jobs are plentiful. If money "devaluation" were the cause, I believe prices would be rising everywhere currency was weak. That does not seem to be the case. There is a lot of available credit for people who qualify, but people are neither borrowing or spending. So, "monkey see, monkey do", hardly seems relevant.
This is the main factor. Another way to say it is an increase in the money supply.
The standard of living among average workers in countries of early industrialization is on the decline, certainly relative decline, absolute in some cases.
Money illusion is one of the oldest tricks in the book, and it works most of the time.
To accommodate the new working class among the countries of new industrialization, on the one hand, and to mask the decline in the standard of living among the formerly middle working class in the countries of early industrialization, on the other, policymakers worldwide have increased the money supply.
One part of that is dangling the prospect of home ownership in front of the eyes of the classes in decline in the countries of early industrialization, branding it "the dream", with the bait of easy loans, money illusion, but with the consequence of high prices and debt.
Do not buy into the illusion of buying as much housing as you can afford; instead seek as little housing as you can be reasonably comfortable in, then dedicate the rest of your energies to improving your skills, marketable, cultural and personal.
As Will Rogers said, "put your money in land, because they aren't making any more of it."
Land price is tied to the population increase. As there are more people on the earth demanding resources, the demand for land will go up and the supply is fixed. If the world population were to go down, the opposite would happen and land prices in general would fall. Also, economic growth is the other factor in increasing the demand for land.
Even with these two factors in the long run, you still can lose money on land in the short run. Prices of farmland in the midwest will drop when corn prices fall to a reasonable level. And your land might not go up in value if you buy in a undesired location, which means you make no money.
In the US and Canada, housing prices have been steadily increasing.
In Australia, it is ridiculously high.
In China, Japan, Korea, it ridiculously high as well.
Europe...same thing.
Did everyone around the world suddenly decide that homes were undervalued and started outbidding each other for a house or something?
Or is it a consequence of increasing population and lack of land?
Banks make loans primarily for real estate. There are several fiat currencies in a either in a currency war or a controlled devaluation. In this environment only real estate is considered a secure enough investment so its getting worse( and it is a government asset). Meanwhile people keep blaming government regulation for the bad economy. Wrong policy to target. It is the policy to to secure land rights that also come from governments but no policy to control finance. All they would have to do is threaten to tax real estate to slow it down.
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