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People have been making this argument since 1990. The Federal Reserve MANDATES that consumer prices go up 2% per year. If house prices ever go down, they'll be

People have been making this argument since 1990. The Federal Reserve MANDATES that consumer prices go up 2% per year. If house prices ever go down, they'll be there - waiting - to pump them up. Prices will rarely ever go down substantially for a long period of time unless the Fed completely changes (I doubt it). You can either: 1) try to time the market (difficult in housing, I'd argue not as impossible as equitities) 2) buy into the bubble 3) hope that the US basically turns into a different country 4) be ruined financially by missing out on the biggest handout in the history of the world (the 30-year fixed negative real interest rate mortgage) Pick your poison.

notch656a 4y ago
Housing prices exploded to compensate for the negative real interest rates. The people who got the handouts were rich people who owned multiple houses and sold them off. For the most part others didn't get that hot of a deal. In effect it was a regressive tax that the poor paid for the rich by paying in inflation the cost to make multi-home owners rich.
- onlyrealcuzzo 4y ago
  > For the most part others didn't get that hot of a deal. How? Dollars are worth $0.5 in 1990. Yet your mortgage payment is unchanged. Your house payment is much less. Rents are much higher. You won.
  - notch656a 4y ago
    >Housing prices exploded to compensate for the negative real interest rates. They didn't "win." They broke even. The people that sold them won. The people with no house but inflated away cash/salary lost.
    - onlyrealcuzzo 4y ago
      If your payment is massively lower than your rent would be - you won. Someone else is allowed to win, too. It's a zero sum game, and the only losers have been renters. That can change if there's a massive, sustained housing crash. But I won't hold my breath for that. I'm willing to bet, like always, house prices won't decline. The value of the dollar will decline instead (because the Fed can just easily QE until the only people that lose are renters).

notch656a 4y ago

Housing prices exploded to compensate for the negative real interest rates. The people who got the handouts were rich people who owned multiple houses and sold them off. For the most part others didn't get that hot of a deal. In effect it was a regressive tax that the poor paid for the rich by paying in inflation the cost to make multi-home owners rich.

onlyrealcuzzo 4y ago
> For the most part others didn't get that hot of a deal. How? Dollars are worth $0.5 in 1990. Yet your mortgage payment is unchanged. Your house payment is much less. Rents are much higher. You won.
- notch656a 4y ago
  >Housing prices exploded to compensate for the negative real interest rates. They didn't "win." They broke even. The people that sold them won. The people with no house but inflated away cash/salary lost.
  - onlyrealcuzzo 4y ago
    If your payment is massively lower than your rent would be - you won. Someone else is allowed to win, too. It's a zero sum game, and the only losers have been renters. That can change if there's a massive, sustained housing crash. But I won't hold my breath for that. I'm willing to bet, like always, house prices won't decline. The value of the dollar will decline instead (because the Fed can just easily QE until the only people that lose are renters).