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American House Price Crash

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I thought a house price crash would stimulate the economy as people could make their house purchase with much snaller debt but the opposite is happening in America.

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I thought a house price crash would stimulate the economy as people could make their house purchase with much snaller debt but the opposite is happening in America.

Any suggestions why this might be so?

People expecting further falls?

Confidence in property ownership eroded?

'Jobless recovery' preventing actual recovery?

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moral hazard, again, leeching public workers and banksters need resetting, otherwise why bother working heh

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Any suggestions why this might be so?

People expecting further falls?

Confidence in property ownership eroded?

'Jobless recovery' preventing actual recovery?

The real problem is that every person/couple who had a pulse was able to get a little or no money down mortgage during the run-up, BEFORE the crash. Many of these mortgages came with a variable interest rate that was almost guaranteed to reset at a much higher rate within a year or two, or at most three years. When I say a much higher interest rate, I mean jumping from five or six percent interest to ten, twelve, or fourteen percent interest. That was the catch to getting a mortgage with little or no money down, that loan brokers pushed people into because their commissions were higher. The people were told to grab these mortgages because house prices would go much higher very soon and they could refinance to a lower or fixed interest rate or both, and take cash out to buy more foreign cars and crap made in China.

Then the collapse came. I don't think "people expecting further falls" has had much of an effect, if any. As for "confidence in property ownership eroded", that is a factor, though it is hard to tell how much of one. Idiots who call themselves journalists who can't write a sentence and who know nothing about economics have written hundreds of articles on why this is not a good time to buy a house, which cities in which house prices are going to fall further, where house prices are going up, etc. Jobless recovery?? Just another phrase someone made up to give people the idea we are having a recovery.

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The real problem is that every person/couple who had a pulse was able to get a little or no money down mortgage during the run-up, BEFORE the crash. Many of these mortgages came with a variable interest rate that was almost guaranteed to reset at a much higher rate within a year or two, or at most three years. When I say a much higher interest rate, I mean jumping from five or six percent interest to ten, twelve, or fourteen percent interest. That was the catch to getting a mortgage with little or no money down, that loan brokers pushed people into because their commissions were higher. The people were told to grab these mortgages because house prices would go much higher very soon and they could refinance to a lower or fixed interest rate or both, and take cash out to buy more foreign cars and crap made in China.

Then the collapse came. I don't think "people expecting further falls" has had much of an effect, if any. As for "confidence in property ownership eroded", that is a factor, though it is hard to tell how much of one. Idiots who call themselves journalists who can't write a sentence and who know nothing about economics have written hundreds of articles on why this is not a good time to buy a house, which cities in which house prices are going to fall further, where house prices are going up, etc. Jobless recovery?? Just another phrase someone made up to give people the idea we are having a recovery.

:

B*stards. Not far short of what's happened in the UK. Is it any wonder we have riots in the streets? Everyone knows they've been shafted big time.

Anywho I wonder how David Cameron got on with his 'how happy are people in the UK survey'?

I suppose he would just put my answer in the shredding pile :angry:

Edited by mason

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I thought a house price crash would stimulate the economy as people could make their house purchase with much snaller debt but the opposite is happening in America.

The personal debt overhang from the bubble is so large, the malinvestment so huge, it will take decades to work through, and expectation that growth will return from debt fuelled consumtion (The Conservatives solution) is IMO in the US a non-starter. The is what a depression looks like.

What are the odds that the Conservatives plan of massive increased personal debt will get the economy 'moving', whilst trying to keep the previous bubble and malinvestment.? Time will tell.

http://suddendebt.blogspot.com/2011/08/sudden-debt-redux-where-are-we-now.html

Edited by jaspers

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I thought a house price crash would stimulate the economy as people could make their house purchase with much snaller debt but the opposite is happening in America.

A house price crash is the equivalent to an economic crash when your economy is built on house prices. 50% of the US economy was dependent on house prices. 70% of our economy relies on it.

Key to halting price declines in this country is to keep pressure on demand, hence unfettered immigration and dangerously low IR.

Edited by Realistbear

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A house price crash is the equivalent to an economic crash when your economy is built on house prices. 50% of the US economy was dependent on house prices. 70% of our economy relies on it.

Key to halting price declines in this country is to keep pressure on demand, hence unfettered immigration and dangerously low IR.

In the US, the know-nothing elected idiots keep saying that if they can fix the housing problem, the economy will be fixed. I believe the reverse is true; if they can fix the economy, house prices will take care of themselves.

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I thought a house price crash would stimulate the economy as people could make their house purchase with much snaller debt but the opposite is happening in America.

See if you think the policies being enacted are conducive to a broad based recovery -

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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