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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Tradelite who wrote (145403)1/23/2002 10:01:22 AM
From: reaper  Read Replies (2) of 436258
 
<<If you wonder why house prices are so high>>

No, I do not wonder at all why PRICES are so high. PRICES are so high because there is too much money sloshing around and it is all going into the real estate market. What I WONDER is how the leveraged US financial system is going to weather the fact that house PRICES are so far removed from their true economic WORTH. (and again, don't tell me that PRICE = WORTH. you might as well tell me that e=mc^3. it is simply not true).

<<because people have had money to buy those houses. It didn't appear out of nowhere, and the pot of money is growing>>

This is PRECISELY where you and I (and other members of this thread) part ways. The money DID appear out of NOWHERE, and as more and more capital is sent off to money heaven (oh Heinz, where are you?) it will disappear as quickly as it appeared on the scene. This situation is already playing itself out in the stock market (where did $3 trillion of Nasdaq "wealth" go? -- well the fact is that it was never really there; again, price does NOT equal worth) and my contention is that the real estate market will do the same.

Frankly, this is no longer worth arguing about, as this will play out over a multi-year time frame, and the one that is wrong (you or I) will be financially ruined and no longer on this thread, such that the "winner" will not have the satisfaction of saying "I told you so."

Cheers
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