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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GraceZ who wrote (87447)8/28/2007 8:30:25 PM
From: SouthFloridaGuyRead Replies (1) of 306849
 
Grace, I read always read what you say with great interest, but I'm not sure whether it really matters if the money was used for housing consumption or personal expenditure consumption.

The inability to tap equity and/or the lack of it will have economic ramifications and the feedback loops will be devastating whether it's for car salesman (if you buy the argument that HELOC's were used for SUV's) or construction, furniture,...housing related employment which is way above trend.

Not too mention that a good part of the housing improvements depreciate instantly so while good from the utility perspective (hey look at my new Viking range) from the cash-flow perspective it's stupid.

P.S. you may have the stats and maybe it's just me, but almost everyone I know has tapped home equity for some type of conspicuous consumption....my assistant who took out ~$60k of which $15k was for an Orlando timeshare, $20k for a 10 yr wedding, and the rest for a boiler and home improvement. Or my in-laws who have spent took out $100k, spent $25k on kitchen and bathroom improvements, paid off some debt, and have now spent $20k on just airline flights in the past 2 years and are once again running out of money (hint: not a cent from me)...or, the list goes on and on.

In other words people may have done some "smart" things as you would probably describe, but they have also done some really stupid things and now the gold mine is empty, but the debt is still there.
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