|Posted: July 7, 2005, 1:03 pm - IP Logged|
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.