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I sincerely hope the appraisal of my property will be twice what we paid for it about 10 years from now.
Then, I can list it for sale for 1 1/2 times what we paid for it, and it will sell quickly
My dream is to find a place in the mountains so far from the highway that sunshine has to be piped in.
Of course, I will likely be dead before that happens, but it is a nice dream...
Housing prices should at least keep pace with inflation, and when they do, that's a sign of health in the economy. This doesn't mean that homeowners are hoping to sell a "questionable investment at a higher price to a greater fool." That means that they hope they made a sound enough investment that it kept up with inflation and they didn't LOSE money.
Often "turning a profit" in real estate is nothing more than keeping up with the local and national market and inflation rates. For instance, say I buy a house for $100,000 and in ten years sell it for $200,000 -but then I have to buy another house in the current market, so to buy an equitable home, I need to spend $200,000.
Good answer IMO. Housing with related industries and sectors is huge, and typically reflects the health of the general economy as it sits with our middle class.
Prices will drop. Though my concern is the irresponsible nature of people when they finally do. I see massive defaults due to people just walking away when they begin to drop.
Well, if people go underwater again.....let's just have the Fed print some money and bail them out.
Well, if people go underwater again.....let's just have the Fed print some money and bail them out.
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.
If the price of gasoline or food, or even college dropped 20%, most of us would be overjoyed.
So why is it considered a catastrophe when housing prices drop?
Not so. If food or gas were to drop 20%, you can be assured that it would mean a very bad thing. It's called deflation, and it is a very harmful sign of a sick economy where demand and investment is declining. Think Great Depression - it had bouts of hyperinflation, but a lot of the long-term damage was caused by deflation.
1. Low demand means everything costs less.
2. Everything costing less means businesses earn less.
3. Businesses earning less mean they cut back production, fire people, and stop investing.
4. Less income and lower employment means lower demand.
5. Lower demand means everything costs even less...see where this goes?
So everyone makes less, hoards money / invests less, and faces a worse burden from their existing fixed debts. It's a downward spiral, and it is very hard to stop once it takes off. It's among an economic policymaker's worst nightmares.
Not so. If food or gas were to drop 20%, you can be assured that it would mean a very bad thing. It's called deflation, and it is a very harmful sign of a sick economy where demand and investment is declining. Think Great Depression - it had bouts of hyperinflation, but a lot of the long-term damage was caused by deflation.
1. Low demand means everything costs less.
2. Everything costing less means businesses earn less.
3. Businesses earning less mean they cut back production, fire people, and stop investing.
4. Less income and lower employment means lower demand.
5. Lower demand means everything costs even less...see where this goes?
So everyone makes less, hoards money / invests less, and faces a worse burden from their existing fixed debts. It's a downward spiral, and it is very hard to stop once it takes off. It's among an economic policymaker's worst nightmares.
This is why ours and in fact most all modern economies shoot for low grade inflation as a basis for national monetary policy. Gas and food prices rise gradually as a result, but they also rise and fall much more abruptly and forcefully from other factors. And when they so rise, we will continue to get all the usual pissing and moaning about inflation.
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.
Yes, for the most part, but there was a lot of government involvement to "help" people keep their homes who had no business keeping them, nor was it just to allow them to because it helped to reduce the natural progression of the market. People should have lost their homes, banks who were stupid enough to loan to these people should have lost money on the deal and folded. Government should have been staying out of the market completely and let it takes it course. This would have allowed people who were smart with their money and didn't blow it on overpriced homes due to the fad to actually come out ahead, but in this day and age, rewarding the foolish and devious is normal.
Economically the importance of home prices increasing equates to higher property taxes which USUALLY equates to better services, more $$ for schools, etc.
Yes, for the most part, but there was a lot of government involvement to "help" people keep their homes who had no business keeping them, nor was it just to allow them to because it helped to reduce the natural progression of the market. People should have lost their homes, banks who were stupid enough to loan to these people should have lost money on the deal and folded. Government should have been staying out of the market completely and let it takes it course. This would have allowed people who were smart with their money and didn't blow it on overpriced homes due to the fad to actually come out ahead, but in this day and age, rewarding the foolish and devious is normal.
Normally I would agree. But in a crashing recession where millions were suffering, losing their homes, banks failing and our general economy tanking, the Feds had to step in.
Normally I would agree. But in a crashing recession where millions were suffering, losing their homes, banks failing and our general economy tanking, the Feds had to step in.
By doing so, they hurt everyone who was not irresponsible. So, what the government did was pick winners and losers and those winners turned out to be the criminals (banks and politicians who helped them) and the irresponsible.
They didn't have to step in, the market would have righted itself. Banks would have folded, other banks who didn't make stupid loans would have benefitted from it. Those who paid enormous amounts for homes because "everyone else was" and didn't consider the consequences of such would have lost their shirt to which all those who weren't stupid as such would have gotten homes at a greatly reduced value.
This is how reality works. One persons loss can be another person's gain and those who were losing, did so by their own hand, of their own agreement, of their own risk. If you reward failure, then people will not act responsible, they will not learn lessons and everyone who is responsible ends up paying for those who are not.
So, here we are back to a market shooting up again, everyone is excited and loans are flying out like crazy, people are rolling the dice again to get the pay offs on home buying as if it was a collectable trading fad and what will happen next? The market WILL crash again, and... here they will be again, crying about the unfairness of it all, how they need the government to step in because you know, those banks are too big to fail, and well... those people who stupidly paid for those homes are going to lose money.
Where is this money coming from? Who is going to pay for it all? Let me guess... tax payers are going to get stuck with the bill, yet again... you know... because people need the help.
It is insane, and you know what? It won't work this time because the government is broke... severely broke and if they keep on this track, if people keep acting like idiots, everyone is going to get devastated, but hey... as long as stupid has company, its ok right?
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