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

To: MulhollandDrive who wrote (181220)	2/2/2009 2:24:51 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 306849

What housing bust? Cheaper homes boon to younger families This article in the Asian Times of all places makes a pretty good case that a decline in home prices is a sign of societal sanity: atimes.com blogs.tampabay.com This is not a business cycle, but a life-cycle malfunction. The baby boomers imagined that home prices would keep doubling every 10 years, and that one day, each of them would sell his house to his neighbor and retire. This silly idea contributed to a bubble in home prices. America's personal savings rate was zero for the past 10 years, because as long as home prices were rising Americans did not think they needed to save. Now that home prices have collapsed, the boomers are short 10 years' worth of savings and are desperate to catch up. Your problem is that nervous retirees are making most of the decisions, rather than young families. The trouble is that America is getting grayer. People with young children are spenders rather than savers. Young people take risks, and old people buy insurance. Your country needs more children. Demographic dearth is the root cause of the economic crisis. Too many aging people tried to accumulate too many assets, and created the biggest asset bubble of all time. Lower home prices make it easier for people to start families. The housing price crash transfers wealth from old people to young people. That's exactly what you want to happen. Posted by James Thorner at 12:27:52 PM on February 2, 2009 in \| Permalink Comments "The baby boomers imagined that home prices would keep doubling every 10 years" The above statement was part of the NAR advertisments to which they advertised that home prices on average double in ten years. That was intended on keeping the bubble going, but there was not much truth behind it. The consumer needs to better understand the old saying, if it sounds too good to be true, then it is. My personnal perspective is the consumer was conned by the NAR who came across as the so called expert, but mislead the public with incorrect information. Posted by: Fuzzy Bear \| February 02, 2009 at 01:44 PM