Why Property Prices Cannot Be Allowed To Fall

39
238

After Obama’s historic economic recovery following the financial crisis of 2007-08, real estate prices have resumed their natural upward trend. Both the Federal Reserve and the Obama administration have put in place a range of policies that continue foster this housing recovery, and Americans continue to reap the benefits to this day. However, many on the right are now advocating policy changes that threaten this recovery, despite the fact that for the average American, their house is their most valuable asset.

Like stock indices, real estate is one of the few investments that is guaranteed to be profitable in the long term, as long as fiscal and monetary policy remains sound. The Federal Reserve ensures that interest rates remain low, allowing Americans to afford larger mortgages and pay ever higher prices for homes. In addition, a thriving mortgage backed securities market, backed by Freddie Mac and Fannie Mae, transforms these mortgages into tradeable instruments, which creates jobs for thousands of people on Wall Street, and adds trillions of dollars to the economy. Many Americans have got rich simply by buying one or more properties and watching their value increase by 10’s and 100’s of thousands of dollars. For many, the increase in the value of their property dwarfs the income they receive from their regular job. The real estate market is so big in America, and employs so many people, that in the smallest towns in the most sparsely populated areas you can still find at least four or five real estate agencies. Studies indicate that real estate makes up 15 – 20% of the economy, and if prices were to fall, millions of jobs and trillions of dollars would be lost.

Many young people complain that property prices are too high and that they cannot afford them. But what they don’t understand is that with low interest rates and subsidized mortgages for first time buyers, they’re free to take out a mortgage as large as they like, with no risk. Parents, teachers and the media actively encourage young people to get a large mortgage as early as possible as an ‘investment’, which will help them pay back their student loans.

The fact is, real estate has become the most lucrative and democratized industry in America and across the world. Paying 10 – 20 times your income on a home is not only sensible, but essential to your long term financial well-being. However, in order to make sure this market remains profitable and continues to employ millions of people, we need to ensure that prices continue their steady perpetual rise. People who support policies that threaten this market are enemies of the American dream, and threaten the livelihoods of hundreds of millions of Americans. For the sake of our country, they need to be stopped.

trav777

I agree; anyone who opposes the financial orthodoxy as articulated by the Federal Reserve and top economists, is a threat to the nation and should be labeled a terrorist and droned.

The higher prices just mean larger mortgages for longer durations. Don’t worry that you’re paying some rentier in perpetuity like a serf would, just trust economists. Pay as much as you can because debt = wealth.

hungrypirana
hungrypirana

The fastest way to elevate real estate prices is for the government to purchase every house that comes on the market for less than $500k, then give them away in a modern day Robin Hood program. And just as with free health care, free tuition, free food, free this and that, if you think it’s expensive now, just wait till it’s free.

Pbier
Pbier

10 to 20 times income is actually quite conservative, but I admire your advice for young couples starting on the housing ladder to be conservative. For those seeking higher returns, a gearing of up to 100 times income will result in a better return on capital. As MDB says, property prices are guaranteed by the US treasury so the risk of any downside is negligible at best,

TrueDat
TrueDat

I had to laugh when i saw “sound” referring to monetary policy. The current pump and inflate policy works in the short term but thats it. Historically there does. Ot exist a fiat currency that has bit failed.

Housing is a bubble that inflates bursts and then reinflates. The obly constant winners are banks and gov.

#antisemitic

TrueDat
TrueDat

A great way to raise housing prices is to dump a bunch of refuges in government subsidized housinf. We should support government housing for refugees, low income persons, r covering drug addicts and other progressives. This is the o ly way to make sure propertt values co tinuw to climb.

TrueDat
TrueDat

Oh for those that missed it, the authorities may have caught the suspects responsible for the Istanbul airport in nightclub massacre.

It appears that the religion of love (islam) has struck again. Thanks Mo!

#islamophobic

juicedid911
juicedid911

i hope they baptize him with freedom until he reveals who funded him.

ExpatLogger
ExpatLogger

If you mean waterboarding, you should be flagged Islamaphobic.
Everybody knows Santa responsible for Turks nightclub massacre & Istanbul airport false flag. Check yr facts whodid911

Reforming
Reforming

You know I am Muslim right? Stop being an islmophobic

juicedid911
juicedid911

i know how we can raise real estate prices. the government just has to bull doze neighborhoods all over america. theyre very good at doing this overseas and even domestically as we saw at Waco, Texas in the 90s. Create a Bureau of Relocation Services which will take in a few trillion dollars and put our taxes to good use by destroying as much property as the government thinks it has to. Claim eminent domain if need be.
supply and demand bitches

gdpbull
gdpbull

It just goes to show you can create wealth without producing anything.

TrueDat
TrueDat

Isnt it time for crusades 2.0?

Stinking goat humping woman inslaving boy molesting stoneage backwards muslims. At least thats what the rest of the world thinks of tou (at least the practicing muslims).

wpDiscuz