jrhana.
You had commented:
In the extreme scenario, I believe that real estate in fact will be the life boat that allows many financially unsophisticated to survive. At least those that own there own home in a not over-leveraged situation.
Certainly if one owns one's home and has the mortgage fully paid off, that's one expense (i.e. a mortgage) that a household will not have to generate income to service.
However, in the depression of the 1930's, people didn't want something they could touch ... they wanted cash ... cause nobody had any. And all assets (with the exception of precious metals and high-quality bonds) were liquidated to raise cash, leading to excess supply of pretty much any financial (again with the exception of high-quality bonds) or hard asset in the book.
Also, even if one owns one's house outright, one must still be able to service the land tax, heating bills, electricity bills, etc.
But I do agree that owning an asset outright (i.e. debt-free), as long as one has a steady source of income (i.e. cash flow) is a heck of a lot better than owning Cisco stock. :)
However, there's a lot of mortgage financing and equity refinancing that has been extended to subpar/marginal lenders. When things go bust, there will almost certainly be serious excess supply in the housing markets. As long as one doesn't have the need to turn one's house into a liquid asset, thereby having to sell in a depressed market, you should be fine.
JM2C on the matter.
And, if the currency actually turns worthless, God help us all. <ng>
Regards,
Glenn |
