patrick.net

What will eventually occur here is either, house prices will be unaffordable for most people and owners of houses will have no qualified buyers being stuck with their overinflated assets or what I imagine, the mother of all corrections will occur and house prices will crash down to affordable levels leaving these buyers who paid the inflated price bankrupt and under water. this will be inevitable as the chances of pay increasing to match the home price is not likely. The current market in most states is fake. Living in NYC, I can definitely see it when dumpy junk houses go for almost $700K yet the average family I know earns around 120K a year making a home 5X income or more...

Tim Aurora says

Indiana Jones says

"Federal Reserve chair Janet Yellen recently treated the nation to an astonishing lecture on the solution to rising wealth inequality--according to Yellen, low-income households should save capital and buy assets such as stocks and housing."

She is right. You have to save from what you earn. I have saved while I was earning $14 an hour ( before taxes) with a wife . Never bought a car with a loan. Just refused to spend of vacations, dinners and cars.

Wake up early to make sandwiches to bring to office. Drink water from the water cooler. Wear the same clothes for 5-10 years. Save a bundle that way.

mfs.admin says

Living in NYC, I can definitely see it when dumpy junk houses go for almost $700K yet the average family I know earns around 120K a year making a home 5X income or more...

IMHO, five times annual gross income is the pivot. Higher is not sustainable.

Think of how much capital is tied up in homes.

It should be liquefied and put into business development.

And if its the Boomers and Silents who "lose" I really dont' care. They mostly bought their homes when they were 1/10th of the price! And assuming they intend to die in their castle, what difference does the price of it make?

Tim Aurora says

Indiana Jones says

"Federal Reserve chair Janet Yellen recently treated the nation to an astonishing lecture on the solution to rising wealth inequality--according to Yellen, low-income households should save capital and buy assets such as stocks and housing."

She is right. You have to save from what you earn. I have saved while I was earning $14 an hour ( before taxes) with a wife . Never bought a car with a loan. Just refused to spend of vacations, dinners and cars.

Yeah and if the Fed would abolish itself and stop causing stagflation they could actually get a head start with the savings instead of being fucked over with far-below inflation yields and inflated house prices ;)

Amongst my friends, those who own the most homes tend to be Gen-X-ers. Boomers tend to be most affected by divorces.

Peter P says

Amongst my friends, those who own the most homes tend to be Gen-X-ers. Boomers tend to be most affected by divorces.

Aren't your friends mostly working in tech companies in the SFBA? I am glad they are such successful Gen Xers- truly the Golden Children of Silicon Valley. My experience is different - Boomers and Silents having multiple real estate holdings, with younger generations having none or struggling to hold on to what they have.

Some Boomers did struggle with divorce or loss of savings due to the crash, so they are not quite as well off as they once were, although almost all of the Boomers I know had enough cushion and rode through the storm fairly intact.

Reality says

The Middle Ages, as you pointed out, was a period during which land ownership was largely by privilege (feudal claims by conquest) not primarily driven by market forces. The gold and silver in circulation could buy some goods, but usually not feudal land claims/titles until near the end of the feudal era.

Very little gold and silver in circulation - a pitiful fraction of what it had been even in the 3rd Century of the Roman Empire.

No need for banking in the backward Dark Ages, since there was so little commerce and industry.

Indiana Jones says

The only winners in the housing bubble are those who bought in 1998 or earlier. The extraordinary gains reaped since the late 1990s have not been available to younger households. The popping of the housing bubble did lower prices from nosebleed heights, but in most locales price did not return to 1996 levels

Most of those people only bought one house, there is no benefit to them. They still have to live there, and not like they can sell and buy something cheaper.

The only beneficiaries were the big banks on wall street who made a killing on the deal, while it's the American people who got screwed in the process.