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Money in a saving account needs to be re-lent out to society in order for the banks to earn a profit, thus even putting them into a saving account is a positive to the economy.
doesn't that lending increase the money supply which leads to inflation which makes the poor worse off?
Investment: money invested: an amount of money invested in something for the purpose of making a profit
You do NOT buy a home to make a profit, you buy it for a place to live..
Homes are liabilities because with them come taxes, maintenance, insurance expenses etc.
The fact that some people make a profit from them, doesnt make them investment
I view buying a home as a defensive investment - a hedge against rent inflation. I look at it not as a way to make money, but as a way to avoid losing money.
I know quite a few people who are buying property now in hopes of turning a nice profit in a few years.
I did the same a few years ago, in fact I own 4 homes.. None of them are investments, every one of them are liabilities. I might have equity in them, which makes the equity an investment, but the house itself hold expenses every year.
Quote:
Originally Posted by Hoonose
Well I guess I'll have to send back all my real estate investment related gains then! <LOL>
Income tax liabilities doesnt make property liabilities disappear..
Dunno about the other cities, but the outer boroughs of NYC have a lot of single-family neighborhoods which could be built more densely.
Houses in the outer boroughs are already on top of each other. Just Google maps over Queens.
From 2005:
Quote:
When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone.
In Flatland, which occupies the middle of the country, it's easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don't really have traditional downtowns, just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can't even get started.
But in the Zoned Zone, which lies along the coasts, a combination of high population density and land-use restrictions - hence "zoned" - makes it hard to build new houses. So when people become willing to spend more on houses, say because of a fall in mortgage rates, some houses get built, but the prices of existing houses also go up. And if people think that prices will continue to rise, they become willing to spend even more, driving prices still higher, and so on. In other words, the Zoned Zone is prone to housing bubbles.
And Zoned Zone housing prices, which have risen much faster than the national average, clearly point to a bubble.
Dunno about the other cities, but the outer boroughs of NYC have a lot of single-family neighborhoods which could be built more densely.
If the single family neighborhood homeowners own the land their on which their homes are built - and they usually do - how do you get more homes in the neighborhoods? There is no more land on which to build...
I view buying a home as a defensive investment - a hedge against rent inflation. I look at it not as a way to make money, but as a way to avoid losing money.
It's an investment. You are being told that any asset which has expenses related it cannot be an investment, but a liability, which would mean that things like 401K are not investments because there are expenses associated to it. It's just word games, and personal opinions, that's all. Buying real estate is an investment. Period. For many people it is the only way of saving money, because they may not be putting any money in the bank, or 401K, but they accumulate equity on their home. If some people choose to call real estate something other than an investment, then that's fine, but it is what it is. The topic here is whether or not the rise in real estate price is good or bad.
For the most part it has been the banks that have been bailed not the people. It is the banks business to make a proper loan and understand the nature of the borrowers finances and repayment potential. Banks should expect a small portion of their loans to go bad, but that all should be taken into account in their business which is to create money to make money.
All the evuuuulll banks fault!!!!
I guess that is the easiest way to think about the explosion of the last financial bubble. That way we have a boogeyman that is easy to hate and many do not have to reflect on the STOOOOPID mistakes THEY made.
The new housing run up and implications are not on the order of magnitude as in 2007-8. Going more by the book, the buyers are more secure, as are the lenders. And the current move is more regional, not general.
Don't forget about the HUGE bubble in the stock market.
The housing market bubble will take down the stock market bubble or vice-versa??????????????
July 22, 2013
At this point, the market is beyond overextended.
Last week was options expiration (Wall Street’s favorite time to shred options traders). And thanks to Ben Bernanke’s promise to keep the money printers running
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