>Real estate prices rising means that the people are getting more wealthy. When real estate prices fall, it means that people are most likely getting less wealt

>Real estate prices rising means that the people are getting more wealthy. When real estate prices fall, it means that people are most likely getting less wealthy. That uses real estate prices as an indicator for how the economy is doing. However, it doesn't mean the economy gets better because real estate prices are up. This almost reminds me of the backyard furnaces during the great leap forward. Metal output was seen as a indicator of good industry and so Mao had everyone melt perfectly good pots and pans and other stuff to improve the indicator. However, most of the metal was useless and the pots and pans were gone. What the article described sounds similar to me. Housing prices are way up, economy indicator looks great, but people are living on the street. > What you're describing here is called "re-financing", it's a perfectly normal means of borrowing money against your house if you have enough collateral. I've never heard of people doing it so that money goes back into the economy, it's usually to re-invest money into your house like for construction or whatever, and your monthly payment just increases. So the money does go back into the economy. Also: Not all re-financing results in a larger mortgage than before. Some people re-finance to get lower interest rates on the same or smaller principal.