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A 20% reversion is back to early 2021 prices..

• cjbgkagh 4y ago
  Given the long history of ever increasing housing prices people have become accustomed to treating asset price inflation on property as income. Why work a 9-5 when your house can make your money (and your banks money) go to work for you. A lot of that money is spent - it's very difficult to un-spend it for a downturn. Plus a chunk of the recent nominal price inflation is due to general inflation and regressing to the same price 2 years ago is a loss in absolute real terms. Plus going forward people who could assume a $100K yearly increase in wealth from a property have lost that $100K in 'income' and must make up the shortfall from elsewhere. It's a huge marginal difference. Then there is the erosion of the tax base; governments make a percentage of the capital gains on nominal inflation as kind of a wealth tax. During a deflationary period this money disappears and can take a very long time to come back. The shortfall again must be made up for by further taxing the taxpayers or by borrowing with the expectation that the same taxpayers will pay it off later. These are the same taxpayers who lost their $100K in 'income' so they're not exactly flush with money.
  • onlyrealcuzzo 4y ago
    In China for decades, the average house appreciated more in one year than the average person made after taxes in a life-time.