Website review: Housing: Why the bubble popped - Is...
bgamall discovered this in Real Estate
•1 reviews since May 12, 2008
real-estate
•thedailypage.com/isthmus/article.php
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bgamall discovered 2 months ago- "We have encouraged people to buy homes because they would earn a rate of return above inflation. How long did we think that would work? Who is supposed to pay for those homes when most of us don't have incomes rising faster than inflation? Indeed, encouraging people to think about their homes as a mechanism to build wealth is a centerpiece of American popular culture. Only a couple of generations ago, families chose a home and neighborhood because they would be nice places to live. When we started thinking about home ownership as a capital investment, "trading up" became more important than liking our homes or our neighbors. Indeed, we protect our investment by making sure that people who live in smaller homes or apartments don't live near us. The median size of new homes grew from 1,560 square feet in 1974 to 2,248 square feet in 2006. Did the size of the average household grow that much? No, it shrank. Did incomes go up that much? No. But as new homes got bigger and more expensive, we all wanted to sell our "used" home for more money so we could take the next step up. There's nothing wrong with home ownership. What's wrong is persuading people they can buy homes they can't really afford. What's wrong is protecting that illusion by ignoring the basic rules of economics. What's wrong is trying to create value by creating debt. That's what's really behind the foreclosure crisis."
