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: damainman who wrote (25370)	11/23/2004 5:27:39 AM
From: Mike Johnston	Read Replies (1) of 306849

Question: what hurts the average person more, a stock bubble or a housing bubble? Do you mean hurt by the bubble itself or hurt by bursting of the bubble ? I am assuming that you mean by the bubble itself. The average person is not hurt by a stock market bubble. Nobody needs to buy stocks to survive so who cares if some stocks sell at 100 or 200 times earnings. Housing bubble is just the opposite. It inflates a price of something that everybody needs to survive, a place to live. To the extent that the bubble makes it more expensive to acquire a product that is necessary for survival those people who need to acquire that product during the bubble are hurt. The bubble not only makes it more expensive, it makes it more difficult due to bidding wars, competition from speculators, shortage of properties for sale, waiving of inspections etc So first time home buyers are hurt the most and so are renters. Another group that is hurt are conservative savers who see the value of their savings decline due to inflation and artificially low interest rates. Subsequently there are many people that are hurt by the housing bubble : those that did not buy real estate, those that bought too late, those that did not buy enough, those that sold too soon, those that did not sell close to the top, those that bought at or close to the the top, those that bought past the top on the way down. Eventually pretty much everybody will be hurt by the housing bubble. Even the high flying mortgage brokers and speculators who will see their gains and income drop. It is not a good feeling to be worth $2 million after being at 5 million even when you were worth half a million before the bubble.

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