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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 (36399)	7/29/2005 1:01:59 PM
From: GraceZ	Respond to of 306849

Housing expense follows incomes and incomes have risen for hundreds of years, in real terms. People are willing to spend a fairly predictable portion of their earnings for housing, so having a stable to shrinking money supply (the money supply grew before the advent of the Fed, back when we had a commodity based money system) would not necessarily result in stable housing prices. As to my own personal happiness, my house provides me with the same service regardless of the selling price. The price of my current house remained stable for almost seven years before rising and my previous house sold for the same price I paid for it ten years earlier. I have no problem with stable housing prices because I've never lived any where, where I couldn't afford the price I took on. During the time when I lived in a house that never rose in price, my income and that of my husband rose 40% so the monthly payments, while constant, shrank as a percentage of our income. I didn't need for the house to rise in price to benefit from stable predictable housing expense. The service the house provides me with is, of course the obvious one, shelter, but the less obvious one is that it provides me some assurance that a large portion of my living expense will remain level and predictable over a long time frame. Say I could rent a house for the same price I could buy (this was true in my old neighborhood just 8-9 years ago) what would the lease be worth if it was for say, thirty years AND the rent would remain stable for those 30 years, how much of a premium would you pay?