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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From: RealityNotFantasy	3/4/2005 9:05:29 AM
	Read Replies (3) of 306849

Renters don't have home equity and savings............? IMHO... Imagine, California early 1990s, Real Estate at its pinnacle at that time. People are glowing in the great appreciation of their RE properties. Yet, at the same time, businesses are grumbling on how expensive labour, and taxes are. Lets concentrate on labour. Labour I believe is one of the largest components of business expense. Imho, a high RE inflation undermines this even further by increasing costs to employers. The labourer has a choice, ask for a higher wage because RE costs are higher or move to another metro where their new wages are lower but RE costs are even lower in contrast to their new wages. When enough people leave, the employer won't have the pool of labourers it used to have and itself would leave eventually. In a sense, RE growth has to track income growth because renters don't have equity in their apartments. Mortgagees (NOT homeowners...what a distortion..lol) don't understand this and think prices can only keep on going up. So who's going to buy these properties when renters without equity AND savings(1%?), can afford them? It seems that people in a newly enriched metro don't comprehend that their enrichment can make them a victim of their own success.

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