Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (1266)	2/27/2001 12:20:31 PM
From: ahhaha	Read Replies (2) \| Respond to of 24758

Ordinary people buy homes with borrowed money. The thing that matters the most to them is the monthly PITI payment not the price. You are saying that if people believe they're sufficiently wealthy or that their prospects are sufficiently bright, then they are price indifferent. This is the true definition of the wealth effect. It's what helps to maintain inflation even though the sands of economic reality are quickly running out underneath. As mortgage rates fall, home prices rise because people are only looking at the payment. How is it possible to have rising prices and falling interest rates? ISn't it demand which causes prices to rise? The only way is that FED is forcing rates down by creating excess money. The market isn't resisting because the market has no idea where equilibrium lies. The market has no idea what the intrinsic inflation rate is. The market hasn't decided to accept the inflation which is blossoming everywhere. The market has been trained by the past and fooled by persistent years of FED intervention. Real estate agents won't even show you a house priced below what Ginny Mae will qualify you for unless you threaten them a couple of times. This is part of what the market ignores. The entire society is indexed to inflation. A little inflation is multiplied by all these structures. When the average person can't afford the average house or rates go up or people become insecure about their job then prices soften, but as long as they can afford these increases there is no reason for them to do anything but go up. This is more of the wealth effect. It's a delusion brought on by the FED's intense and sustained creation of money. It causes people to make wrong decisions based on their expectations of future worth. I can imagine that the market has already started to soften because people don't shop for houses when they start to worry about their jobs. Shouldn't a soft market cause a slowing of price? Oh, rising price is a result of people refusing to supply, refusing to sell to get a higher price? So we have that price is excess demand and surfeit supply. More demand causes less supply. That's a refutation of economic law. If more demand causes price to rise, then rising price should cause an increase in supply. We must have a backward bending supply curve here. Less is supplied at a higher price. That's hyper-inflationary.

To: GraceZ who wrote (1266)	2/27/2001 12:21:54 PM
From: Ahda	Respond to of 24758

People also start to worry if not about their jobs the possible reduction on options and bonus that allow the tax deduction of mortgage to act as a benefit to total income. When you are just meeting those payments and not offsetting is when the headache starts. This is called bare feet or resole those shoes. The point of optimize credit which now means personal loans all over the place. The theory of ever pump is a blessing to those now facing self preservation. Long range it is a bummer though and unfair to the rest.