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> Which are for a lot of people their only form of savings? It's fake savings unless you are speculating on properties. Most people only own the place they ac

> Which are for a lot of people their only form of savings? It's fake savings unless you are speculating on properties. Most people only own the place they actually live in and only resell to buy another place. A general property market crash doesn't affect the value of your house compared to other house so it's mostly neutral in this regard. Of course people who borrowed before the crash will be in debt for longer than people who bought after but that doesn't actually change their debt situation. You might say it's unfair but well, not wanting other to be better of doesn't seem like a good reason to not solve the housing crisis. In the end the only people who trully stand to lose are multi-owners but they are a significant part of the problem in the first place so that doesn't make me sad.

thrance 2y ago
Thank you, that makes a lot of sense.
Eddy_Viscosity2 2y ago
A case where it isn't fake savings is where people who work and live an a very expensive urban area, like london, may use the home as a retirement investment. So when they retire they move to a less expensive area and can use the difference in housing costs in the two areas as a retirement nest egg.
- AstralStorm 2y ago
  It's an interesting way to try to save, and assumes anyone will want and be able to buy it. And that you will be able to keep the expensive property with expensive costs. Plus compare if living in the expensive vs cheap place gets you more savings... No, it does not make sense. I can see holding a property for a child, but not as retirement.
  - Eddy_Viscosity2 2y ago
    You misunderstand I think. When you retire you sell the expensive property and then buy a less expensive property in a cheaper area. If retired, then potentially have fewer restrictions on where you live because you don't have to commute to work any more. The difference in property costs between the old and new areas is your nest egg.
    - StopDisinfo910 2y ago
      You will still earn the difference between the expensive property and the less expensive one. It will just be a lot less and that’s a good thing. Using properties as store of value or betting on them becoming more expensive have too many externalities. Your case for exemple is directly leading to people actually living and working in the less expensive places being displaced by retirees from the city which is very much undesirable for local life.
      - Eddy_Viscosity2 2y ago
        > being displaced by retirees from the city This is true, but it also creates vacancies in the cities. The retired have to live somewhere..
nly 2y ago
It's not neutral if you've borrowed to buy the home... If you're in negative or reduced equity your mortgage costs can increase dramatically when you refinance. This alone can easily cripple a large % of the population and tank the consumer economy
- fc417fc802 2y ago
  Why would you refinance if you're underwater? Wouldn't you walk away from the property in most cases? Of course that doesn't eliminate the economic impact. It just shifts it elsewhere. An decent case can probably be made for the government to take on such loans and offer some scheme to forgive the difference if certain criteria are met.
  - nly 2y ago
    You can't walk away from your mortgage in the UK without going bankrupt. If you're underwater you still owe.
- StopDisinfo910 2y ago
  Depends of where you live. Fixed rates for full duration are standard in a lot of Europe. You never refinance unless it’s winning for you. Forced variable rates are a scam.

thrance 2y ago

Thank you, that makes a lot of sense.

Eddy_Viscosity2 2y ago

A case where it isn't fake savings is where people who work and live an a very expensive urban area, like london, may use the home as a retirement investment. So when they retire they move to a less expensive area and can use the difference in housing costs in the two areas as a retirement nest egg.

AstralStorm 2y ago
It's an interesting way to try to save, and assumes anyone will want and be able to buy it. And that you will be able to keep the expensive property with expensive costs. Plus compare if living in the expensive vs cheap place gets you more savings... No, it does not make sense. I can see holding a property for a child, but not as retirement.
- Eddy_Viscosity2 2y ago
  You misunderstand I think. When you retire you sell the expensive property and then buy a less expensive property in a cheaper area. If retired, then potentially have fewer restrictions on where you live because you don't have to commute to work any more. The difference in property costs between the old and new areas is your nest egg.
  - StopDisinfo910 2y ago
    You will still earn the difference between the expensive property and the less expensive one. It will just be a lot less and that’s a good thing. Using properties as store of value or betting on them becoming more expensive have too many externalities. Your case for exemple is directly leading to people actually living and working in the less expensive places being displaced by retirees from the city which is very much undesirable for local life.
    - Eddy_Viscosity2 2y ago
      > being displaced by retirees from the city This is true, but it also creates vacancies in the cities. The retired have to live somewhere..

nly 2y ago

It's not neutral if you've borrowed to buy the home... If you're in negative or reduced equity your mortgage costs can increase dramatically when you refinance. This alone can easily cripple a large % of the population and tank the consumer economy

fc417fc802 2y ago
Why would you refinance if you're underwater? Wouldn't you walk away from the property in most cases? Of course that doesn't eliminate the economic impact. It just shifts it elsewhere. An decent case can probably be made for the government to take on such loans and offer some scheme to forgive the difference if certain criteria are met.
- nly 2y ago
  You can't walk away from your mortgage in the UK without going bankrupt. If you're underwater you still owe.
StopDisinfo910 2y ago
Depends of where you live. Fixed rates for full duration are standard in a lot of Europe. You never refinance unless it’s winning for you. Forced variable rates are a scam.