Ive been thinking the same. We're in for some interesting times and yet most Americans seem oblivious and keep buying more toys, more vacations, new vehicles, houses they can afford.
People have a paradigm that long term property just goes up in price, well, because it has for the better part of our entire lives. A certain amount of modest property inflation should be expected, but what we've seen is the combined effect of that modest inflation coupled with the down trend in rates since the 70s. Most people alive today have not experienced the impact of a longer term up trend in rates and it's impact on property prices. We may be seeing the perfect storm of factors that could cause that trend reversal to happen.
The driving factor for increasing property values is banking.
Used to be people were(wisely) opposed to debt.
The standard was on weeks salary for a mortgage.
At a time when you took home a higher percentage of your wage.
And 15 years was a long mortgage.
Today, people have the "gotta have it now's".
They only care about keeping debt close to income.
Mortgages are 30 years.
Mix all that with stupid low interest, and the low interest allows them to...
borrow more. It all combines to push up prices.
Now the $100k home is $150k. Over 30 years they will be pushing a half mill
on the thing, especially if they are typically stupid. And they are buying the same house as a couple years ago.
Funny how things have/haven't changed.
People that bought homes in the 70's paid 10% interest. OMG!
But for 10 or 15 years.
Today it's only a few percent.
But figure mortgage insurance due to a small down,
And a 30 year loan, maybe some other stupid thrown in...
Both ended up paying back 3 times what they borrowed.
I laugh like hell at these discussions.
Everyone forgets financing cost.
Buy a house, pay back 2-3x what was borrowed.
Sell house for 2 1/2x purchase price.
Brag on the money they made.
Ugh, no! You broke even. Maybe lost.
Figure taxes, repairs, improvements....
You probably lived there much cheaper than renting,
considering sale price. But you didn't make a whole lot.
Flipping, rentals, other investing are different. Hopefully!
