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Why Do We Celebrate Rising Home Prices?
Submitted by Ryan McMaken via The Mises Institute,
In recent years, home price indices have seemed to proliferate. Case-Shiller, of course, has been around for a long time, but over the past decade, additional measures have been marketed aggressively by Trulia, CoreLogic, and Zillow, just to name a few.
Measuring home prices has taken on an urgency beyond the real estate industry because for many, home price growth has become something of an indicator of the economy as a whole. If home prices are going up, it is assumed, “the economy” must be doing well. Indeed, we are encouraged to relax when home prices are increasing or holding steady, and we’re supposed to become concerned if home prices are going down.
This is a rather odd way of looking at the price of a basic necessity. If the price of food were going upward at the rate of 7 or 8 percent each year (as has been the case with houses in many markets in recent years) would we all be patting ourselves on the back and telling ourselves how wonderful economic conditions are? Or would we be rightly concerned if incomes were not also going up at a similar rate? Would we do the same with shoes and clothing? How about with education?
With housing, though, increases in prices are to be lauded, we are told, even if they outpace wage growth.
We’re Told to Want High Home Prices
But in today’s economy, if home prices are outpacing wage growth, then housing is becoming less affordable. This is grudgingly admitted even by the supporters of ginning up home prices, but the affordability of housing takes a back seat to the insistence that home prices be preserved at all costs.
Behind all of this is the philosophy that even if the home-price/household-income relationship gets out of whack, most problems will nevertheless be solved if we can just get people into a house. Once someone becomes a homeowner, the theory goes, he’ll be sitting on a huge asset that (almost) always goes up in price, meaning that any homeowner will increase in net worth as the equity in his home increases.
Then, the homeowner can use that equity to buy furniture, appliances, and a host of other consumer goods. With all that consumer spending, the economy takes off and we all win. Rising home prices are just a bump in the road, we are told, because if we can just get everyone into a home, the overall benefit to the economy will be immense.
Making Homes Affordable with More Cheap Debt
Not surprisingly, we find a sort of crude Keynesianism behind this philosophy. In this way of thinking, the point of homeownership is not to have shelter, but to acquire something that will encourage more consumer spending. In other words, the purpose of homeownership is to increase aggregate demand. The fact that you can live in the house is just a fringe benefit. This macro-obsession is part of the reason why the government has pushed homeownership so aggressively in recent decades.
The fly in the ointment, of course, is if home prices keep going up faster than wages — ceteris paribus — fewer people will be able to save enough money to come up with either the full amount or even a sizable down payment on a loan.
Not to worry, the experts tell us. We’ll just make it easier, with the help of inflationary fiat money, to get an enormous loan that will allow you to buy a house. Thus, rock-bottom interest rates and low down payments have been the name of the game since the late 1980s.
We started to see the end game at work during the last housing bubble when Fannie Mae introduced the 40-year mortgage in 2005, which just emphasized that when it comes to being a homeowner, the idea is not to pay off the mortgage, but to “buy” a house and just pay the monthly payment until one moves to another house and gets a new thirty- or forty-year loan.
It Pays To Be in Debt
On the surface of it, it’s hard to see how this scenario is fundamentally different from just paying rent every month. If the homeowner stops paying the monthly payment, he’s out on the street, and the bank keeps the house, which is very similar to the scenario in which a renter stops paying a landlord. There’s (at least) one big difference here, however. It makes sense for the homeowner to get a home loan rather than rent an apartment because — if it’s a fixed-rate loan — price inflation ensures the real monthly payment will go down every month. Residential rents, on the other hand, tend to keep up with inflation.
But why would any lending institution make these sorts of long-term loans if the payment in real terms keeps getting smaller? After all, thirty years is a long time for something to go wrong.
Lenders are willing and able to do this because the loans are subsidized and underwritten through government creations like Fannie Mae (which buys up these loans on the secondary market), through bailouts, and through a myriad of other federal programs such as FHA. Naturally, in an unhampered market, a loan of such a long term would require high interest rates to cover the risk. But, Congress and the Fed have come to the rescue with promises of bailouts and easy money, meaning cheap thirty-year loans continue to live on.
So, what we end up with is a complex system of subsidies and favoritism on the part of lenders, homeowners, government agencies, and the Fed. The price of homes keeps going up, increasing the net worth of homeowners, and banks can make long-term loans on fairly risky terms because they know bailouts of various sorts will come if things go wrong.
But problems begin to arise when increases in home prices begin to outpace access to easy money and cheap loans. Indeed, we’re now seeing that homeownership rates are going down in spite of low interest rates, and vacancy rates in rental housing are at a twenty-year low. Meanwhile, new production in housing units is at 1992 levels, offering little relief from rising prices and rents. Obviously, something isn’t going according to plan.
Who Loses?
The old debt-based tricks that once kept homeownership climbing and accessible in the face of rising home prices are no longer working.
From a free market’s perspective, renting a home is neither good nor bad, but American policymakers long ago decided to favor homeowners over renters. Consequently, we’re faced with an economic system that pushes renters toward homeownership — price inflation and the tax code punishes renters more than owners — while simultaneously pushing home prices higher and higher.
During the last housing bubble, however, as homeownership levels climbed, few noticed or cared about this. So many renters became homeowners that rental vacancies climbed to record highs from 2004 to 2009. But in our current economy, one cannot avoid rising rents or hedge against inflation by easily leaving rental housing behind.
This time around, the cost of purchasing housing is going up by 6 to 10 percent per year, but few renters can join the ranks of the homeowners to enjoy the windfall. Instead, they just face record-high rent increases and a record-low inventory in for-sale houses.
There once was a time when rising home prices and rising homeownership rates could happen at the same time; it was possible for the government to stick to its unofficial policy of propping up home prices while also claiming to be pushing homeownership. We no longer live in such a time.
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Nobody owns homes except the banks. Uh is that the right answer.
~"Why Do We Celebrate Rising Home Prices?"~
Funny question, that. In the same vein, I wondered why I didn't dance a celebratory jig at the prices of beef when I was in Costco yesterday. No inflation, my ass. Needless to say, all I purchased was ground chuck. There was no dancing.
"my ass" is almost right. My assets would be more to the point. From "wealth effect" theories to believers in housing/real estate as good collateral to all the bad debt, you have the reason for celebration, and, they wish, continued ebulliance of "animal spirits".
It's easy to see that most people who are renting to own (Have a mortgage) buy their banker's advice that "Your home is an asset" (Of the banks), but what they don't realize simply is, when the value of the home goes up, so does the taxes on it, and that's precisely what the state does, they send out an appraiser to constantly reassess the value of your home...
Homes & Cars are liabilities, that's all they ever will be, and though homes may be a necessity, many people have lived centuries without paying taxes on a home...
Gone are the days of where you actaully own things, just don't pay your taxes if you want to find out who truly owns your home...
Occam's Razor still applies -- the simplest rational explanation is usually the right one:
Given that "Rewards dictate behavior", it's because the FIRE* industry , and its Commission-based business models depend on price increases. Duh!
* Finance, Insurance, Real Estate
Partying for several months while not paying the mortgage, saluting Obama?
Flipping the American Dream.
yes. many thank yous to the author. we live in an absurb paradoxical paradigm. keep hammering away at the maniacs driving the bubbles. get the correct memes out into the marketplace of the mind, the collective conscious of a nation. then we can work together to improve things for all.
"But why would any lending institution make these sorts of long-term loans if the payment in real terms keeps getting smaller?"
Because it's not the bank's money, they just collect interest on it.
Devaluation Banksters, celebrate rising home prices. There's plenty of ZOMBIE inventory out there.
Most Americans’ accumulated wealth is in their homes. That’s why when the Fed pricked the housing bubble in 2009, US household wealth declined to $81.3tn, a 0.2% drop, according to the Federal Reserve.
If Americans don’t put their money into their homes, where are they going to put it? In NIRP savings?
The Guardian wrote in December, 2014:
“Americans’ net worth is influenced by two major factors: homes, and stock market holdings like retirement funds. Rises in home prices help the middle class; jumps in stock prices help the rich.
“’That’s because houses account for nearly 63% of the assets of the middle-class,” according to Edward Wolff, an economics professor at New York University. That compares to just 9% for the wealthiest 1%. …
“Meanwhile, most stock market wealth is held by the top 10% of households, which own 80% of stocks.
· Only 9.5% of middle-class families’ assets are in stocks.
“In fact, a US family is more likely to own a cat than individual stocks, according to CNN Money.”
http://www.theguardian.com/money/2014/dec/12/americans-wealth-shrinks-middle-class-falling-home-prices
It's nice to hear from you J.R.
Houses aren't "rolling inventory". Easy to rehypothicate.
Happy weekend, Yen. Ironic isn’t it? Greenspan tells us a house is not an investment.
That’s after he blew and burst the biggest housing bubble the world has ever seen and left millions of homeowners holding the bag. And now he tells them housing stagnation is here to stay; get used to it. The history of the Fed for the average man has been a horror story.
The central point is that the work Americans cherished was when they were building their private property. What a colossal tragedy that man’s lifelong effort to build his estate was viewed as a playground by the owners of the Federal Reserve. America’s private property is now Federal Reserve property.
They're thieves; they take other people's money.
Accumulated Wealth? Money saved is NOT wealth, it's called capital, wealth is derived from assets, and Americans have little or none of those. A home is NOT wealth nor an asset either, it's a liability, and the more you put into that home, the higher your taxes will be, probably far higher than NIRP...
If you want to make money, then get a financial education, and stop handing out bad financial advice PLEASE!
Stocks are for corporations, if you don't own one, you don't have any business owning stocks.
(I'm sure all of those employees at GM who bought into those stocks would whole heartedly agree...)
Enjoy your Downsizing, Right Sizing, and Layoffs America, gone are the days of Job Security, replaced by Corporate Freedom (to give your job to foreigners)...
Goodbye Full Time Jobs, hello contract & contingency / temporary work...
America is so SCREWED it's pathetic!
Rising home prices are one of the few indicators of INFLATION that's NOT manipulated downwards by gov.
I've been doing a good amount of genealology work of late and it's astounding what you see over the past hundred years (hell, it's been ridiculous over the course of MY 50+ year lifetime).
As an example - a pretty ordinary two family house was bought by my grandparents in 1948 for $12,000. My parents bought in in the late 60's for $29,000. It would have sold for close to $200,000 after the 1970's run up in prices and finally sold for over $500,000 in the early 2000's. Burbs just north of NYC but in a pretty ordinary town - NOT one of the really expensive places to live.
The reality was that housing prices remained pretty constant for a VERY long time in the US (as did your buying power in general) - with the exceptions of times when wars were being fought when inflation did occur. Most people did NOT own their house - even those relatively well off rented. Housng prices dropped precipitously during the Great Depression and some owners walked away from properties - or leveled them when unable to rent or pay property taxes. Even in my youth - in the 1960's I remember a few vacant houses around town sitting empty (the owners couldn't rent them) - something unheard of 20 years later. Now you're seeing a few empty foreclosed or about to be foreclosed but around here that's pretty uncommon with strong demand (being close to NYC).
We bought one town away from where I grew up - at the market low - after Gulf I (Couldn't have afforded to remain in the area if the market hadn't dropped). As is we'd worked multiple jobs and saved like mad - putting off having kids until well into our 30's to gwt financially 'stable' after being the first in our families to go to college. We've seen our property taxes more than triple - along with the 'value' of our house (in part due to inflation and in part due to renovation work on a very old and neglected house). Local services and the schools have clearly NOT gotten correspondingly 'better' and IMO have gotten visibly WORSE wih local roads falling apart. That rise in taxes is the norm here but has NOT been matched by a rise in incomes. You're seeing peopel move out or downsize substantially when kids finish school. We liked here because people stayed here for most of their ives but now they can't afford to remain here because of taxes. You get lots of Manhattanites cashing out on apartments and willing to pay high prices and taxes in the burbs because it's still cheaper than private school in NYC. But you've destroyed the economic range you used to have in the inhabitants. If you didn't inherit a house you can't afford to buy a place if you're an average working guy. You're losing all the people that used to be around and served as volunteer firemen, in Scouting and such. The white collar execs are in Manhattan from 7am to 7pm.
Too many people are being conned and told to buy cheaply built condos or houses built far away from jobs in the exurbs - places where the cost of a commute is barely affordable. If you buy because you're afraid of 'missing out' you're going to get screwed no matter how cheap the interest you pay. I'm still astounded at how few people actually owned houses - even into the 1950's. A grandfather who was reasonably well off (an exec in Sales) rented for most of his life - buying a smallish place only in the last 10 years of his life when he owned his own business. The few people that DID own houses were back before 1850 - when they owned farms. A few store owners owned their own houses - but it seems as if their family had been in the same place for eons and they likely inherited. From the mid 1800's on when people moved to cities they all rented. Ironically, he few very weathy people that you come across doing genealology research seem to have rented as well - one living in hotels for some time (along woith trips to Europe - one married to a scion of a steel fortune, another married a bank president's daughter and NO children).
One good thing is that high rents & home prices in the suburbs outside the city (espeically in the 'burbs' outside NYC) keep out the riff raff and people you really don't want living near you. People who are paying property taxes year after year should have a say on who visits or buys in their neighborhood whether you want to call that NIMBYism or racism that is the truth. If you want diversity then pay $4,000 a month in rent for a doorman one bedroom apartment in Manhattan
When you are checking out home prices throughout the past 80 years make sure to note when the NAR was founded.
I'll give you a hint to what happened to home prices once there was an organized national group who would gain massively from skyrocketing home prices.
Home prices took off like a rocket after staying steady for over twenty years.
Insightful comment. Zero needs more comments like this.
Thank you for that background. I'm left with a question - who were the landlords in those days when so many rented, even the wealthy. Was it a relatively smallish group of invividuals? Were they businesses? I mean in very general terms.
what about rents?? rents in the tri state ( NY, NJ & CT) metroplitan area and Eastern Massachusetts have gotten absurd. $2,000 a month will get you a tiny one bedroom 20 + miles outside Boston, somewhere maybe in Suffolk County on Long Island (where the LIRR is another $250 a month + Subway to Manhattan or in the worst parts of Jersey City or Newark NJ. Rents keep rising and these fresh faced 20 somethings that article after article this site and from the lame stream media portrays as 'victims' of the recession can somehow pay these outlandish rents because they must love living the city, paying $3,000 a month for a 'luxury rental' + $500 a month for parking.. If one didn't get into the housing market prior to 1997 (when prices started their parabolic ascent upward after the tax laws were changed eliminating capital gains on $250,000 of profit & increasing the mortgage interest deduction) and when one could buy a 2 bedroom co-op apartment in Brooklyn or Queens for $200,000 or so they are NEVER going to be able to buy if they aren't making in the six figures or don't have mommy & daddy to give them the down payment AND continue making the student loan payment.
Insurance premiums, along with property taxes, also rise as the house is reappraised in value by the city. That is why a lot of people in the northeast hang on until they retire then bail for Georgia, South Carolina, Alabama. They can get a much better home for a fraction of what they sold their northeast property for and have a lot of money left to fund their retirement. Florida has gotten too weird to seriously consider.
Come on, Florida is great. It's 100 degrees Fahrenheit and humid for half the year, has tons of crime, huge bugs, plenty of super hot screwed up models in Miami, a combination of young aggressive drivers and senior citizens on the road at the same time demonstrating the ill effects of a 60 MPH speed differential and boasts countless sink holes that can swallow your house while you sleep. What is your issue?
"That is why a lot of people in the northeast hang on until they retire then bail for Georgia, South Carolina, Alabama."
For them who dream of doing this, keep in mind that it you too plan a move to one of these states, leave your attitude back in the Northeast. That means do not be a know-it-all, learn to be pleasant, forget aggressiveness, and most importantly, be humble.
This is well-stated. I would go further to say that what the economy really needs is a round of deflation in housing costs, deflation in healthcare costs, deflation in college costs and lower taxes. All that stuff that sucks up most of your paycheck has inflated faster than paychecks for decades and finally broken the system. Add a billion low cost Chinese and Korean workers using automated factories churning out cars, cell phones and iPads delivered to an Amazon Kiva robot run distribution center and drone delivery and you have a recipe for the jobless disaster we find ourselves in.
All the wealth of the new economy has flowed to the top 5%. If the media had any clue, they would be celebrating instead of bashing on a daily basis the McDonalds and Walmarts of the world that actually employee a huge number of people relative to the Amazons and Apples of the world they have deified.
Deflation isn't going to happen because it will cost a lot of Jews paper wealth.
Putting millions in poverty is a small price to pay so Mr. Weinstein can see his net worth grow.
People need savings. We need to invest in something today that will hold its value in the future, so as not to be left begging for handouts when we’re old and feeble.
There’s no point saving paper money that central bankers can devalue at will. Few Americans own much precious metal. Most of our saved wealth is in our houses, so we cheer when home values rise, weep when they fall, and design our public policies (e.g. zoning laws) to make housing more expensive.
This is perverse. Young adults need safe, spacious, affordable housing close to good jobs if they are to marry and raise children. Forcing them to live with their parents or rent studio apartments leads to Japanification and eventual extinction. Section 8 makes this worse by bidding up rents on family-sized apartments, and subsidizing only the families least likely to incubate productive citizens.
Young adults need to be cut off of all promises (perceived or real) and false hope of any and all handouts. They need to be taught of worst-case scenarios instead of pie-in-the-sky dreams.
Hopefully young people will peacefully accept a less affluent lifestyle in the future.
My parents never expected "handouts" growing up, they just expected houses to be priced in the realm of affordability, which they were. Treating any asset as a savings vehicle inflates its worth far beyond intrinsic value. Gold is natural for this role because it has few non-monetary uses.
My dad bought his house in 1970 for $32,000 while earning $22,000/yr as an engineer. Now a vacant lot in that town costs $320,000, but engineers don't make $220,000/yr.
Small apartments in vibrant neighborhoods are no place to raise children. If that's what you mean by "less affluent lifestyle", welcome to the endangered species list.
Maybe we'll just burn down the planet.
If wages rose by 10% a year and homes rose at the same rate, people would still be screwed.
10% of $60k is six grand. 10% of $350k is a whole lot more. In fact even a 20% rise in incomes can't overcome a 10% rise in home prices per year.
The greatest lie is that home equity is wealth. Home equity is just the expansion of debt upon debt. It isn't money in your pocket until you sell. Because of the appreciation you are going to owe more in commission.
Your home may have appreciated by $30k, and you can borrow against that. But now you are going to owe at least $5k on what you borrowed. You have also put your home up as collateral on that loan.
The only people that really want home prices to go up forever are Realtors and banks. Making a killing is a lot easier if you can get commission from selling two million dollar homes vs ten $100k. You'll probably have to work a lot less to sell that million dollar house as well. If you can call anything a realtor actually does work.
Ah because home is where the heart is?
A house is a place to live. A house is a place where you raise kids, enjoy family time, relax, sleep, eat together, and live peacefully. Lord knows there is enough distraction everywhere else in the world, so a house should be a sanctuary.
Problem is we let the banks run the economy. For the banks to lend money out (in normal circumstances) a security needs to be attached to the loan. With an individual who requests a loan, what do you expect the banks to secure? Car? Clothes? Job?
Banks figured out a long time ago that the only tangible asset the majority of us have is our house, and it can't be easily ported. Therefore, to increase lending and increase bottom line results, credit standards had to fall over time to induce more unwitting participants to take out a mortgage. Here is the start of Ponzi 101.... first in can get out and reap capital gains, last in will be wiped out trying to chase what earlier entrants did so seemingly easy.
So houses went up in price because banks are greedy and in order to lend more, illusionary capital gains needed to be the part of the reason borrowers would line up. People are greedy too, but by and large the "economy" has, and is, controlled by the banks. Just turn on your TV to any home and garden channel and what do you see? "Flip This House", "Vegas Flippers", on and on. The financialization of our dwelling is the problem, and since some of the largest conglomerates own TV networks, the flipping mentality is forced ad nauseum.
A house is NOT an investment. That's complete bullshit. That's what you are told, so that you willingly line up for a larger mortgage than you can mathematically ever pay back. Look at this from the banks' perspective: You are a slave and they don't really care about your well being. Home prices rising and the financialization of our dwellings is done on purpose only to enslave more citizens.
Think about your credit rating for a second. Now, think of it from a bankers' perspective. They call it a credit rating to give it a good sounding numerical grading system that you can stomach, because if they really called it what it is, the Slavery Index, you'd never borrow.
A house is not an investment. The sheeple went along with what they were told and now are totally screwed.
The big western banks have ruined money and fair value.
Well written, and mostly correct.
But it's the government, via a vis the GSE's, that spawned the shack mania. And it truly IS a mental obsession with many people. All these bastards in shacks think about is profit when they flip their shack. Very few people are going back to heloc's, to tap that unearned "equity" (what a travesty), early.
It seems these cretins HAVE learned a little bit from the last time...
But...it's the goddamed flipping craze that is driving shack prices through the stratosphere. That is, until the last bloke can't find a lender on a shack with an inflated price beyond a lender's willingness to bite...even WITH the GSE's. That's what happened last time, and that was the pin pulled on the grenade.
The way to stop the flipping, and to FORCE shack buyers to avoid the practice, is to tax the proceeds of all flipped sales of shacks "owned" less than 24 months at 100%.
A tiered tax up to 10 years after that, would stop this economically-deleterious practice COLD.
m
Taxes are the problem, not the solution.
So is the regional inflation caused by skyrocketing property tax appraisals on artificially-inflated shacks. This is what the mania is causing in many areas of the country, the flipping racket being the most pernicious source of rising shack prices.
Those costs are passed onto EVERYBODY in an affected area, and a very substantial number of those people don't get a damned thing outta it.
The general cost of living rises where increasing appraisals suggest greater affluence exists. Since everyone, from the grocer, to your doctor, "perceives" wealth gains, they all want THEIR cut too.
BUT...THOSE cost increases are borne by EVERYONE, whether they're part of the mania, or not. That's not right. While property taxes to fund primary education (in many states) are paid by all shack owners, with or without kids in school, THOSE taxes generally do NOT find their way into inflating the general cost of living the way shack mania-inflated appraisals do. The two aren't the same.
Further, when developers ride into town to swell an area with new shacks to feed the mania, they are NEVER required to fund the expansion of area infrastructure their new suburbs will depend on. They build out the land without having to pay anything to expand already-crowded roadways, for example, that their shack customers will load further.
Local citizens pay for this (AND put up with the costs to replace something they already paid for...with something they would otherwise not have needed), whether they can participate in the shack racket or not. Developers sell their cheaply-constructed junk at obscene prices, pocket huge profits, and move on to another pasture without ANY fiscal responsibility for the significant rise in infrastructure loads their activities create. They don't expand roadways, for example, by a single inch to accommodate the new population densities their "developments" produce.
Were THAT to happen, profits would be reduced (gee...can't let THAT happen) OR, their product prices (shacks) would be increased (can't let that happen either, as THAT would threaten the whole racket itself).
No...WE pay to pad their profit.
Those are ALL more taxes paid by a great many without ANY direct gain from the shack mania.
The tax I proposed to stop the flipping would at least be a little justice for all THOSE people, while at the same time, act as an antidote to the seriously harmful effect shack flipping has on our already-crumbling economy.
One way or another, this racket has to be crushed.
m
a house is an investment if you plan on buying one and living in the same house for your entire working life. a thirty year mortgage almost spans one's entire working life. the financial strategy used to be to buy a house, pay it off by retirement age and live the rest of your life "rent" free. it still works for millions of people. but for millions more the state has filled the gap with taxes. i know of many cases where peopel are paying more in taxes than their mortgage payment becaue the "appreciation" of the value of their home has increased their tax liabilty which fills the coffers of .gov.
so yes, if you don't treat your home as an investment it will become your very own .gov money machine making your purchase a very good investment for .gov, not you.
So why Does ZH Celebrate Rising oil Prices?
Same shit, folks. As a man in the industry I can tell you it is financialization that is the current and future problem.
financialization is the only real measure of an economy nowadays. it isn't what value added goods and services a country produces but the amount of money that is borrowed that is borrowed to produce the goods and to buy them. the little known reason the fed is thinking of raising rates is because the number they think is the threshold for financial activity is close by. between the financial highjinks of the dtreet, student loan and auto uying and leasing, activity and the real estate market finally breaching what used to be the level of home building activity that used to signal a recession(1 mil units/yr) on inflated values the fed thinks the economy is approaching a normalcy that warrants or provides enough cover for raising interest rates which will increase financialization numbers and save the world(if you are a .1%er or a bank).
So, what we end up with is a complex system of subsidies and favoritism on the part of lenders, homeowners, government agencies, and the Fed. The price of homes keeps going up, increasing the net worth of homeowners, and banks can make long-term loans on fairly risky terms because they know bailouts of various sorts will come if things go wrong."
That's NOT going to happen the next time...
Regardless of the "commitments" made by the GSE's, I am convinced there will be a major uprising by tens of millions of struggling Americans, who haven't benefitted one iota from this shack mania, to stop it.
And it's looooong overdue.
That's the ONLY way this country is going to get its collective mind right about shacks, and other bailouts.
If the citizens of this country making nothing in income (and therefore, unable to leverage this madness), while still working their asses off, allow any kind of bailout this time, we truly are hopeless...and done.
Mark my word...hardworking Americans locked out of this bullshit game will NOT allow themselves to be screwed again.
Even if that puts millions of current shack owners on the street.
It's either that, or we're not just looking at another Great Depression very soon...we're jacking around with a catalyst for Civil War, version 2.0.
Extreme hyperbole, you say?
That's what they said about 2008...in 2007.
Wait and see.
m
We're reaching the point where there just arent enough people who can afford to buy the over-priced houses and the prices will fall. The government can't 'fake' supply and demand forever.
The ultimate price limiter in the housing market are WAGES, yet the policy of inflating asset values through cheap money discourages production which is necessary to increase labor demand, which is necessary to increase wages. It's a downward spiral.
If you not noticed yet its because houses have become the "backing" for fiat money. All this haggling about gold and silver when all you needed were hard unprintable assets. So its houses.
You cant save in cash. You cant save in stocks. Then you save in a house, at least it lets you live in it.
Of course the choiice is random. Legend goes that not too long ago germans cherished lumber. Blocks of lumber and logs. It was like money.
Marx called it commodity fetishism. Its a sociological thang.
While one would be stupid not to diversify into properties, they are very illiquid, can lose value rapidly without a quick exit and the paper which proves your ownership can be easily disregarded in unstable times.
"This is a rather odd way of looking at the price of a basic necessity. If the price of food were going upward at the rate of 7 or 8 percent each year (as has been the case with houses in many markets in recent years) would we all be patting ourselves on the back and telling ourselves how wonderful economic conditions are? Or would we be rightly concerned if incomes were not also going up at a similar rate? Would we do the same with shoes and clothing? How about with education?"
Well it is like all the talk of "GROWTH" one recalls. Turning livable communities into cesspools. None of it makes any sense EXCEPT if you know the End Game.
The millions upon millions of LEGAL immigrants that enter the US each year need places to live...
We do not need any immigrants any more than Japan does. That’s ridiculous. Legal immigration is causing White displacement.
It must be the brown people at fault, not all the white people who happily ushered in features of socialism and communism during the 1900's. The severing of the gold standard in 1971 pushed this whole thing into maximum gear where the middle class does nothing but shrink. Was it brown poeple who asked for the gold standard to be severed?
No, your theory is wrong. Immigrants pour into the remaining vestiges of capitalism by the hundreds of thousands and yet the economy does just fine. Hong Kong and Singapore are the only two places in the world resembling capitalism, and their economies are extremely strong and growing for all segments of the population.
I thought you setup your comment well. But your conclusion "Legal immigration is causing White displacement."
I think of it in terms of what the oligarch is doing, it is not about some made up rules.
Talking about the end - game. If you can see the real picture beyond all the noise, the problems make much more sense. The problems are systemic because the system is designed to fuck you.
You can fight for scraps from the master's table or fight to be free.
But HOW do you think you might effectively fight for more freedom?
Because it makes people feel better about slaving away for the next 30 years that their house is worth more than they bought it for, except for thsoe who bought near the peak who are still underwater.
The same dumb ones view the stock indexes being high as a good sign to continue to piling on debt...
What's this "We" shit? I detest rising home prices. Higher property taxes is all I'm getting out of it.
Damned idiots thought they were going to get rich flipping houses. residential property is not an investment. Colleteral maybe but never an investment.
A friend's parents just sold the beachfront house in NJ that they built in 1968. They bought the 75x150' lot for $8000. They built a 2 story 3 bed 2 bath large porches nice but modest shack for around $13k and spent every summer there. In the 90s they put on a new roof, windows, and made some upgrades for around $50 grand. They are now pushing their late 80s, the kids live on the left coast and don't want the place, maintenance is getting beyond them as are the stairs, and they just sold the place...for a cool $2.7 million. Love the appreciation...best investment they ever made. It won't be true for the current buyer, however.