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August 27, 2005
Housing Bubble

I'm not so sure the housing bubble "bursting" will have the strongly negative impacts that doom sayers are attributing to it. I posted earlier on the theory that job and wage growth support housing related debt far better than housing asset prices so I don't really see a lot of folks defaulting on their mortgages. I can see a slowing of house sales hurting home builders, realtors, and mortgage starts at mortgage companies. However, I also remember past times where the economy was going gangbusters and all the news was about how few new homes were being built.

Our home has gone up substantially in value. However, I'm not sure it matters that much. The next house we want to buy has also gone up at pretty much the same rate. If our house declines 30% in value, I will not have lost money and will have completely kept up with inflation. And, I'm sure that the asking price of the next house we would buy would also have dropped 30%.

Sure there will be the over leveraged mortgage holder here and there. Shame on the lenders for making a high risk loan. I also have little sympathy that being a real estate broker may get a bit leaner. Things have been plenty fat for those folks while the rest of us have gone through tougher markets in our professions.

Posted by hoffmang | August 27, 2005 01:26 PM


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