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> This scheme is doomed to fail. 51% of the people will vote for rising house prices because that's their greatest asset. When highly geared property doubles in
by corpMaverick 9y ago
> This scheme is doomed to fail. 51% of the people will vote for rising house prices because that's their greatest asset. When highly geared property doubles in value, the owners can make 5 or 10 times their initial investment.
You are correct that people think like that. But it is nearsighted because even if the price of your home goes up, you cannot sell it because you need a place to live. It is a lose/lose. It takes away a significant part of purchasing power. Money that could be spent on shopping, entertainment, etc is used to pay the mortgage. Younger people are even more screwed, it is a tax from the young to the old.
- toomuchtodo 9y ago> But it is nearsighted because even if the price of your home goes up, you cannot sell it because you need a place to live. It is a lose/lose. It takes away a significant part of purchasing power. Money that could be spent on shopping, entertainment, etc is used to pay the mortgage. It is forced savings for retirement. Most people downsize once their kids leave home, cashing out their equity (as long as you haven't cash out refi'd your home to buy cars and vacations).
- _chris_ 9y ago> Most people downsize once their kids leave home Except you can't do that in California, because then you're walking away from your Prop 13 "rent-controlled" property taxes.
- corpMaverick 9y agoSome people, those who bought low and sold high at the end of their lives may recover. I can argue that even these people lose because the high prices of housing increased overall living costs during their lives. (e.g. Local business have to pay more on rent, employees need more money,they have longer commutes, etc)