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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (52522)	6/16/2006 6:12:02 AM
From: John Carragher	Respond to of 116555

mish i noticed housing mortgages today have all kinds of various financial alternatives from no money down, etc. i couldn't find a review , if there is one, of families that were renters for decades because they never could never qualify for a down payment to meet mortgage commitments. If in the last decade a number of these renters now are owners of real estate would this shift the financial analysis. Let's assume rental expense was considered one of consumer expenses. Now if they are spending the same rental amount or maybe even less (if they bought a fixed rate mortgage their out go would not be increased because of inflation like rents)are we counting this spending as financial liabilities? Is there some amount of consumer liabilities that shifted but in reality didn't if we compare to loss in rental. Can we assume part of the building boom in last decade was partically attributed to lower and mid income families who could never get into home purchase but with these new creative mortgage deals they are now home owners and we now have calculated their liabilities as much higher when they were spending the exact amounts for rentals. I also expect a good portion of these people have now created some wealth because of real estate bubble that they would never have had an opportunity to part take in as renters. The majority of people i grew up with never saved very much in saving accounts, market or 401k programs. They were conservative or frugal , paid off their mortgages and now have a new found wealth in their homes. Money that is beyond there imagination that they ever thought they would have been able to accumulate. Plus they are now receiving soc sec which is way beyond their expectations (thanks to inflation) and some are making more now in retirement with pensions and soc sec than when they were working. most of these people have been buying the second home in Florida , taking the cruises, tours, etc as they feel more comfortable and now are spending the accumulated savings over three decades. I doubt this spending slow however no idea how much of as a percent of total.