Can someone explain this to me?
- Thread starter Bakinec
- Start date
I make no claims to expertise on the subject but this sounds about right.Quote from keeptradin':
My guess would be mortgage bankers. And supply and demand.
Prior to WWII there were very few people with mortgages. Couples saved their money or borrowed from family to buy their first home, stayed there until it was paid for, and passed it on to their kids.
As years went by and more money became available for people to borrow, more people bought homes, or traded up for bigger homes. Look what happened to housing prices from 2002 to 2007. Homes that sold for 200k in '02 were going for 2-5x that price in 2007.
The reason, IMHO, is the "easy money" that was available during the sub-prime bubble. Interest-only ARMs made it possible for lifelong renters to become buyers, and "flippers" were all the rage. We are now seeing the effects of the bubble bursting, and the homes that were sold for $500k five years ago are selling for one-tenth that price today.
Supply and demand, the only thing I remember from the economics courses I took in college.
are you sure about those facts? The links provided are kind of cumbersome so I didn't see.. On TV they say avg income in USA is 49k and avg house is 160k, so that's not too far off from 1970. And I don't know if avg house is based on appraisal or sale price which could be quite a difference. Not arguing with you that something went wrong, but maybe not as wrong as your facts would indicate.
Contrary to a popular myth, housing prices adjusted for inflation remain relatively flat. For example, from 1890 until 2000, the prices rose ~20%.
Today the prices are ~20% above the historical mean. During the Great Depression, they were 30% below the mean. IMO, housing prices will continue to decline in real terms.
Today the prices are ~20% above the historical mean. During the Great Depression, they were 30% below the mean. IMO, housing prices will continue to decline in real terms.
when I bought my house I ran the numbers up one side and down the other and discovered that moneywise, renting was about the same as owning. The only variable was the price of housing. If it went up buying was a little better, and if it went down renting came out a slight winner.
So really for me it was a lifestyle decision not a money decision.
So when they talk about falling home prices on tv they are all complaining about it because they already own. But what about the poor guy who is trying to buy? Aren't falling prices good for him?
Unless you are dealing in apartments or business realty, I don't see how anyone can call a single family house an investment. It's just a place to live.
for that matter, you could say the same thing about the stock market. Don't falling prices make for a better opportunity for those who are out and want to get in?
Use to piss the hell out of me when I was short and they would say, "WOW, What a good day it was for the stock market."
At least if you are going to talk about housing explain if you are talking from a buyers or sellers point of view.
Use to piss the hell out of me when I was short and they would say, "WOW, What a good day it was for the stock market."
At least if you are going to talk about housing explain if you are talking from a buyers or sellers point of view.
) provide their opinion on my comment.
$20 or $40 bucks at a clip.