The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: David Jones who wrote (5903)	10/4/2002 11:22:21 PM
From: Wyätt Gwyön	Read Replies (1) of 306849

Retiring debt while money is so cheap as i mentioned to you before, due to the current low inflation rate, money is NOT cheap in real terms; only in nominal terms. in real terms money remains quite expensive. the fact that nominal rates are low reflects the low growth, low inflation environment. people can get seduced into thinking this means money is cheap when it is not. because... Seems as though one should be borrowing all one can get but then what do you do with it? precisely. money may seem "cheap" but the return on capital is very low. until prospective returns are high, i see no reason to build up debt. the thing that's scary about a real estate crash is that once the market peaks and becomes illiquid, there may not be a lot of price continuity until distressed-sales levels. this is a problem with all illiquid markets.

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