New Mexico United States
Member #12,305
March 10, 2005
2,984 Posts
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Millionaire status is no longer a sign of wealth. If you were a millionaire 10 years ago on either coast, you need at least three or four times as much to maintain the same standards with respect to the home you live in, the car you drive, the TVs you watch, and the other goods and services you can buy. The flip side of the boom in oppulence is the amount of accumulated debt that's required to achieve the appearance of wealth. The economy takes on about five dollars in debt for every dollar it produces. If the economy contracts in any meaningful way, a lot of assets, mostly homes, are at risk of needing to be liquidated to meet foreclosures.
Interesting observations, and though I don't keep track of such things, my gut feel is you're close to the mark.
However, "If the economy contracts in any meaningful way, a lot of assets, mostly homes, are at risk of needing to be liquidated to meet foreclosures," mightn't translate into the expected release from the consequences of such debt.
My ex-wife and I, living in Georgetown, Texas, at the time of the S&L/overbuilding debacle in 1986, had a lot of equity in a home we'd agreed to pay roughly a quarter-million dollars for ..... relatively large home in those times at pre-1986 home prices.
When the S&L collapse came, the home suddenly found itself surrounded by similar homes the owners had 'walked' away from..... home values plummeted and our home was worth, post-1986 values, about $100,000 if a person could find someone to buy it in that economic environment.
Those values hadn't come back sufficiently in 1992, when my marriage did what the home market had done in '86...... despite a lot of equity, we had to pay out $20K and some change to get free of the mortgage on that house.
Whatever will come if economic collapse comes, owning a home probably isn't going to get anyone out of debt nor provide any financial relief at all.
United States
Member #5,565
July 11, 2004
260 Posts
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I'm finding that in my area that the homes are selling for substantially more than what the homes would rent for, perhaps 50 to 100% above what the equivalent units are being leased. Either the price of the homes need to drop, the rents have to start increasing at much faster rates, or prices have to stagnate for a long period of time, perhaps 10-15 years to allow 4% annual rent increases to catch up. In addition, the area is building far more homes than there are families who want a home to live in. There was an article in the Baltimore Sun this past week where they stated that 2/3rds of area homes were being purchased as investment properties. There's going to be a large number of empty homes going begging when they find that they no longer have enough renters to occupy the homes or other investors to sell them to.
[quote]
The U.S. is creating 1.2 million new households a year, yet we’re building about two million homes and condos. So 800,000 units are serving not as primary residences but as investments or as second and third homes. These houses and condos often go back on the market as rentals, since owners need the income to cover the mortgage payments and taxes. The glut is keeping rents down.
New York, NY United States
Member #13,514
April 7, 2005
235 Posts
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I've had people comment on my playing, but it's my choice. I don't play daily or even every week. If I can fit it in my budget, I play. I look at it this way, when I win, those folks that had something to say about my playing better not come with their hands out!!!!