Housing prices dropping aren’t so good for those who own homes. It is also likely there will be a feeding frenzy of investors snatching up homes. I had a hard time buying a few years ago, because investors kept out-bidding me with all-cash offers. I had to raise my price target to move outside of their impulse buy range, which I was not too happy about.
> Housing prices dropping aren’t so good for those who own homes.
As housing prices are tied to the property tax it is a good thing for people who are not planning to sell anytime soon. Remember a home is a place you live, not an investment. People who treat homes as investments cause a lot of problems for people who just want to live somewhere that isn't propping up some middleman landlord.
The dynamic here is that investors accept 3% return for housing because there are no good alternatives.
The expected return is considerably higher now, this should mean that houses should be traded at PR at around 20 again (as opposed to upwards of 30 when there was no better investments to be made).
Investors will likely not be an issue as long as we don't go into zirp again.
Sometimes people need to move for family or work reasons that are beyond their control. Being underwater on a home in a situation like that isn’t fun. I knew people who ran into that in 2008.
You can use your real estate as collateral if you own it. To buy nice cars, fancy vacations, etc etc. And you want the real estate value to increase as much as possible. Even if that means destroying your nation forever.
Yes, the economy of the entire industrialized world runs on this.
People borrow money against their house to buy a car or a boat because rates are much better. The bank tells them to borrow a few ten thousands extra while they are at it, since the rate is so good. Why don't you take a vacation or get that new thing you wanted to buy?
From where do you think everybody has so much money to spend, while you are working full time and have nothing? It's not only credit cards...
In one case, it was a realtor that bought the home. She was just leaving the house when I went to look at it. Reading between the lines from what my realtor told me, I think she bought it and leased it back to the former owners so they didn’t have to move.
