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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (97154)	8/3/2002 1:16:49 AM
From: Ahda	Respond to of 132070

I do not have to look at geographical locations to determine average annual in the USA. Localized market imbalances are not the issue here; the Fed sets rates for the whole country. The FEd does set the rate for the whole of the nation but the use of the low rates available differs from location to location. And, the whole point is that for an existing homeowner, the cost of housing is not impacted by increase in home values. This is true if you own a home and the value of that home has doubled. It makes little difference unless you wish to use the equity in that house for other purposes. That means you can refinance so you have a larger lump sum to do what you choose to do with. In areas that have risen enormously in price it is wiser to take the capital from the house rather than increase the mortgage due to higher valuations. The tax laws are set up so they give you a cap gains benefit of $250,000 per person.or on a joint return up to $500,000 every two years. Using these rules you are able to create tax free income as well as tax deductions due to interest rates. I do not understand the point of the remaining part of your post, in relation to US inflation. In a very simplistic form the cost of housing has to do with the wages one requires to live in any specific area. When for one reason or another you have excessive costs in housing the business market has to pay wages equivalent to those cost or employees can't afford to find housing. Without wages increasing to meet costs the housing market must come to cost point that the public will bear. If all houses are in the range of 1000 and everyone one is making 1,00 either house have to go down or income has to go up. In areas where there is a severe shortage of land income will go up. The best i can explain it as is as the cost of housing increases beyond income limits the wage level people will require is based on the cost of housing. There is a turn over ever in the housing market and when cost of housing has gone beyond wage capability there will be a request for higher wages so the cost of housing can be afforded. To go a bit farther on this subject one must consider that business when strapped for profit finds ways of reducing costs. Labor rate is not set in the world and in numerous non person to person base businesses the results are that other labor units can be used in other nations to reduce costs. That is what we have been doing and part of the reason why we import so much. Our marginal workers rates have been very high as well as are so called upper management been way too high. The solution for the marginal worker can become in the case of CA too many people living in very small quarters. At this point the wage requirement of the marginal worker must increase as there is no room left for anyone to sleep. Where i live the solving of the problem was a mandate of a certain percentage that apt owners could increase rent in existing buildings. However when the space in existing buildings is no longer available you have come to a limited supply which by very being of limited causes a price increase. The long range cycle rectifies this as business moves where it can afford the cost of labor. The end result is that only the higher cost wage earners skilled in specific areas have wage increases and you have a greater division between those who think they can achieve wealth and those that will achieve. Long story short wages have to go up as employers will pay to keep and get top employees. The cost of housing will come down as the cost in the particular location i live in can not continue up as they have gone beyond employers profitability means. It is in my opinion one stupid mess due that can been attributed to a bunch of tax rulings. These rules have done zip for the average earner as they have gone beyond age limit and have in my opinion completely destroyed the average buyers hopes. The rules have sanction spec and a wonderful way of profit for those who have the ability to purchase a house that can increase in value to the tune of 250 thousand a year on a joint that in two years becomes 500 thousand tax free. the areas that have the least space increase have the greatest cost increase in housing those areas are normally a large part of the hub that feeds the nation. Wages rise and cost inflation is triggered this gradually becomes wage inflation that spreads across the nation. .