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Simply put, if half the people in your neighborhood move out, who needs a plumber? How busy will the diner be? Housecleaning? Carpentry? How many will be buying appliances? When people are evicted, there are less around to support the local economy.
What happens when people move out, is that new buyers move in. As long as the house prices stay at historical norms, the people who move in earn similar amounts to those they are replacing.
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When that spreads, "Local" can become quite large. A lot of people with actual professional skills are now not needed where they live,
You have it back to front. The real economy drives housing value, not the other way around.
I have seen prices on houses drop even more, $20k to $50k
if they have dropped that much, they were overpriced to begin with
the houses that aren't selling, even at low prices, simply aren't desirable for one reason or another -- them lingering does not mean there's something wrong with the market.
that's how it used to be, read any economic website/analyst to see that as housing goes, so goes the overall well-being of the USA
if the US economy's health is reliant upon high property values, then the US economy needs to tank and seriously restructure itself for LONG TERM health because any economy that is reliant upon elevated asset prices is doomed to fail and any remedy that props up those asset prices will only make the next crisis that much worse. We got into these problems with short term thinking. We aren't going to get out of them with short term temporary remedies.
that's how it used to be, read any economic website/analyst to see that as housing goes, so goes the overall well-being of the USA
I read them every day (subscribe to Financial times). You're getting the causal dynamics of the whole thing completely wrong.
What is bringing down the banks is the fact that there was a housing bubble. It's true that at any given point in time, the money the banks lost is tied to how bad the bubble was in hindsight.
Unfortunately, changing our hindsight by pretending that the bubble really didn't happen is not a fix. It's denial.
yeah, it may be 5-7 years to get back to the peak, but so what -- did everyone really think they could get rich on stocks and quit working at 35 ?
this is delusional. Even if prices fall to 4x income, people will still spend 40% of their income to maintain their houses. This means that they will have no savings upon retirement. This means that housing prices will be lower 30 years from now.
We are nowhere near bottom and given the cheerleading going on, here and elsewhere, it will take a few years to get there. The more suckers believe them the more this pump and dump will go on.
Last edited by halfoffpeak; 05-05-2009 at 03:33 PM..
Why would anyone be upset at missing "the bottom"? It's not about bottom picking unless you are planning on flipping the house of course... It's about buying when price actually reflects value.
And Nov 2008 will in no way be the bottom (for NJ as a whole, for some particular house or even neighborhood, sure if they didn't bubble much). One set of crappy numbers that is contradicted by other sets of numbers does not a truth make. And even that set of numbers will turn out to just be a small rally during a long decline. In my opinion obviously.
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