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The lower the better. The more affordable real estate is, the stronger the economy. Too bad the FED is inflating our savings away.
That sounds good in theory but in practice as more homes drop in value, our government becomes starved for funds. Right now they are talking about English Teachers being laid off in CA because falling home prices is causing a government crisis. Also, as more homes drop in price more people are owing more on their mortgages than the home is worth and then people are walking away from their homes. This destroys communities and neighborhoods.
That sounds good in theory but in practice as more homes drop in value, our government becomes starved for funds. Right now they are talking about English Teachers being laid off in CA because falling home prices is causing a government crisis. Also, as more homes drop in price more people are owing more on their mortgages than the home is worth and then people are walking away from their homes. This destroys communities and neighborhoods.
No, what destroys communities is mis-directed uneconomical investment.
Too many people built and occupied housing too far away from centers of work and food distribution. The US economy, in the new global competitive context, is simply not strong enough to distribute energy anywhere everyone pleases because it looks nice and because the population perceives free money.
An excellent rule: don't get high on the money supply.
US policymakers and US residents have broken this rule.
Printing more money is not going to magically re-arrange overnight the way US society distributes the use of land, space, and energy. That is the real problem, but caused by delusional monetary policy.
Granted, we have to give the heroin addict codeine in the meantime, but what will re-purify the blood flow that brings nutrients to the body in the medium/long-term?
Right now our money supply is so polluted that economic agents do not know how to accurately measure the value of saving and investment. Housing will "get that bad" until such time as the currency's store-of-value function is restored and we learn how to make intelligent investments again.
Let's hear some real policy prescriptions instead of kissing the ass of drug-pushers, sorry, I mean monetary policymakers, who insist on adding to the problem, and to whose profit?
You're right. Renting will be king over upcoming 15-20% mortgage rates.
What I do see, however, is massively reduced revenues for landlords as families cohabitate and individual demand falls off a cliff. Of course you're welcome to deny them accomodations for such a purpose (having too many people in one unit), but since housing unit supply has exploded, they'll have many alternatives to rent or squat. Profit margins will be razor thin.
Any non-exportable service, similar to Eastern Europe decades ago, will be incredibly cheap compared to globally available consumer goods such as food and energy. College tuition, manicures, rent, massages, escort services, etc. If you hoarded precious metals or foreign currency for such an occassion and are not dependent on US dollars for purchasing power, you will live like a king.
I honestly see no problems in the future of rentals.
Our retirement farm, was paid for with cash from our rental income. We do have a fixed mortgage on the apartments, but it is well covered by rental income. And even it we lost it, we still have our farm free and clear.
Exactly. The "ownership" society spiel was misdirected: instead of distributing free money so that a significant proportion of the population could go into debt ("ownership society") by acquiring uneconomical housing in uneconomical locations, they should have distributed shares in productive companies, like oil, defense, information systems, telecommunications, maybe even health care insurance.
But what were these people in regions like southwest Florida, for example, doing? Where they mining for oil? Manufacturing shoes and socks? Planting vegetable gardens?
As it stands, the lending community will have to, in some way or another, take responsibility for a portion of this housing, and thus these homedebtors will revert to being renters, and another portion will have to be simply bulldozed, the concrete manifestation of years of mis-allocated investment.
I honestly see no problems in the future of rentals.
Our retirement farm, was paid for with cash from our rental income. We do have a fixed mortgage on the apartments, but it is well covered by rental income. And even it we lost it, we still have our farm free and clear.
Of course you've done well. The economy has been humming along for years through two asset bubbles, enriching many including landlords. That's changing before our eyes.
Of course you're not seeing problems with renting in the future. You are heavily leveraged in the industry. Do you think many realtors see the housing depression unfolding in front of them? Those whose best interest is at stake within an industry will always see the world with rose colored glasses. Be careful they don't obstruct your vision.
I'm just offering basic economic supply/demand. Supply has exploded, so therefore demand has to fall off precipitously. More choices, less costly, less profits for landlords. We're not there quite yet as these surplus housing units going into foreclosure have to be organized into renting units or families have to be desperate enough to squat in them illegally. This takes time to unfold.
Having a farm free and clear entitles you to grow food so you may not have to worry about that. Heating and cooling it? Another story and one to be prepared for.
... Having a farm free and clear entitles you to grow food so you may not have to worry about that. Heating and cooling it? Another story and one to be prepared for.
I sell produce at an organic Farmer's Market now.
We heat with wood and peat, both are harvested from my land.
Cooling? In Maine? Really?
Not so much, we open the windows in the summah time.
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