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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Mike Johnston who wrote (24651)	10/19/2004 11:15:21 AM
From: independent	Read Replies (2) \| Respond to of 306849

IMHO: Mark, "If i am a first time homebuyer i would rather pay 200 K for a house at 8% interest rate with 40 K downpayment than pay 500 K for the same house with 100 K downpayment and 5% rate. Thus it is not a homebuyer that benefits from low interest rates, it is the seller who is getting an extra 300 K. Also i would rather buy at my leisure, than compete with dozens of desperados or flippers who buy without inspection." I totally agree with your statement. If people only did their own math, they would realize that they are in fact paying MORE. No, imho, its not more affordable than ever to buy real estate; its the opposite. Ditto for loan consolidations. It seems most are only looking at the lower interest rates but don't bother to look at the principal or the term. Also, it seems most websites these days have a PAYMENT CALCULATOR but not an INTEREST CALCULATOR. Hmmm, I wonder why? Here in the Twin Cities metro in MINNESOTA, it seems people I come across, have at least 2 if not 3 additional properties aside from their shelter. Its no wonder that in the city I live in, the average home price is around $500,000. The reason given by most is population growth and scant building but it seems there are more and more multi-unit buildings that I see and read about? It seems population growth has stalled because its now more expensive to live here. The cost of living here is just about as expensive as Chicago BUT Chicago has more amenities, more choices and much better transportation system and warmer too!! Yes, the MINNESOTA is also OVERPRICED but probably not as overpriced as Boston, Orange County, San Diego, or San Francisco. One particular family I met (Dad, Mom & Son), had four properties between the three of them. It makes me wonder if the tighter supply is the result of these so called, "investors". Just last week, I read that the number of available supply has increased by 36%. Interesting... They can have all the houses they want. As a renter here, I would not want to pay for OVERPRICED housing in MINNESOTA where it gets very humid during Summer and gets down to -20f during WINTER. Paying for both air conditioning during Summer (2 months) and heat for 6 months is not CHEAP. This is not to mention the extra upkeep on houses and cars around here because of the extreme humidity and extreme COLD. Its almost cheaper to live in California, LOL! At least you don't have the upkeep and the 6 months of heating costs! I'm thinking of moving to a more reasonably priced and warmer metro eventually. Just my two cents....

To: Mike Johnston who wrote (24651)	10/19/2004 10:47:39 PM
From: gpowell	Read Replies (1) \| Respond to of 306849

how would one call a current economy in the US, where government intervention via artificially low interest rates causes a massive transfer of wealth from middle classes and the poor to the rich ? ....but they lost much more than that, because they have suffered close to a 50% loss in the purchasing power of the dollar during the last 5 years no matter whether you want to measure it against real estate, the euro, food, gasoline, college tuition or health care. Therefore bond investors have lost wealth. Investors that had their money in CD's have really been slaughtered by a double whammy of interest income slashed around 80% while suffering from loss of purchasing power as well. Take the government out of the equation for a moment. All the effects you are attributing to government intervention still occur. Fractional money is still created from thin air, money is saved and invested, wealth is created, homes are bought and sold, and relative prices evolve to match individuals’ marginal rates of substitution between the multitude of possible consumption, savings, and investment choices, spanning both the present and future. It is these continuous flows of substitution decisions that price responds to, which, in turn, serves to reallocate resources, and transfers the wealth. Certainly, government, which is simply another economic agent, can change these flows, but not to the degree to which you seem to be attributing.