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Chicken and egg. If the workers can't pay rent the market will correct rent down. It's that it takes too long to correct and someone's bound to be evicted befor

Chicken and egg. If the workers can't pay rent the market will correct rent down. It's that it takes too long to correct and someone's bound to be evicted before that happens.

deleted 15y ago
[deleted]
jbooth 15y ago
If the landlord can't afford mortgage, how they gonna lower the rent? Run that scenario forward a couple steps and you see the real looming problem.
- ams6110 15y ago
  Landlord is foreclosed, bank sells at a loss, new owner rents at a lower amount. Nobody said it would be pretty.
  - jbooth 15y ago
    Ok, so we had a problem the size of a few paychecks, now it's the size of a piece of property. Hey, whatever, right? But I said a couple steps, keep going, multiply that by a few hundred thousand or a couple million around the country. Can you think of any other problems that might result?
- analyst74 15y ago
  keeping over-priced goods at inflated price using whatever means will never work out in the long term. that applies to real-estate too, which (the real-estate industry) seems to have become the driving economic sector in many countries, which I find funny. edit: and a note on why it's funny, the value of a property never changes, only the price. From an individual perspective, you can make money trading real-estate just like trading stocks; from government's perspective, higher GDP is always good; from bank's perspective, as long as property value increases, they will make money from both interest and foreclosures; but from a society perspective, nothing of value was ever created in the process.
  - jbooth 15y ago
    Most economists consider deflationary spiral to be a nightmare scenario. See: Great Depression and Japan's lost decade.
    - analyst74 15y ago
      I have no good answer to turn the world into a harmless place, but at least part of the cause of Great Depression was measures to pull the economy out of the recession that preceded it. Nobody is happy when economy stagnates, but keeping the economy going by inflating prices of goods has never worked out in the long term. At some point it will crash, and it will hurt more the higher you go.

Chicken and egg. If the workers can't pay rent the market will correct rent down. It's that it takes too long to correct and someone's bound to be evicted before that happens.

deleted 15y ago

[deleted]

jbooth 15y ago

If the landlord can't afford mortgage, how they gonna lower the rent? Run that scenario forward a couple steps and you see the real looming problem.

ams6110 15y ago
Landlord is foreclosed, bank sells at a loss, new owner rents at a lower amount. Nobody said it would be pretty.
- jbooth 15y ago
  Ok, so we had a problem the size of a few paychecks, now it's the size of a piece of property. Hey, whatever, right? But I said a couple steps, keep going, multiply that by a few hundred thousand or a couple million around the country. Can you think of any other problems that might result?
analyst74 15y ago
keeping over-priced goods at inflated price using whatever means will never work out in the long term. that applies to real-estate too, which (the real-estate industry) seems to have become the driving economic sector in many countries, which I find funny. edit: and a note on why it's funny, the value of a property never changes, only the price. From an individual perspective, you can make money trading real-estate just like trading stocks; from government's perspective, higher GDP is always good; from bank's perspective, as long as property value increases, they will make money from both interest and foreclosures; but from a society perspective, nothing of value was ever created in the process.
- jbooth 15y ago
  Most economists consider deflationary spiral to be a nightmare scenario. See: Great Depression and Japan's lost decade.
  - analyst74 15y ago
    I have no good answer to turn the world into a harmless place, but at least part of the cause of Great Depression was measures to pull the economy out of the recession that preceded it. Nobody is happy when economy stagnates, but keeping the economy going by inflating prices of goods has never worked out in the long term. At some point it will crash, and it will hurt more the higher you go.