LG, Doug- If I'm not mistaken, supposedly the "wealth effect" from rising real estate prices is as powerful, or more powerful than "wealth effect" from stock price appreciation in upturns (although, given the magnitude of the recent bubble in stocks, perhaps this time equities could play a bigger role)..
However, when housing prices start to slow their gains, or even reverse in some/many areas, isn't that going to have a decent-sized impact on consumer confidence/spending? I think of all those who took out home equity loans, and who are now sitting on a lot less equity...and/or negative equity.....with the double whammy of lower stock portfolios, I could see some people pulling back the spending reigns for some time to come...
If someone's net worth goes down 20/30/40% or more, I'd think they'd make different choices! (than before)
BTW- It is absolute obnoxious how much mail, phone calls, etc I am getting from the home loan guys right now...they sound almost desperate... |
