Quote:
Originally Posted by Architype
Price increases are fueled by an increase in demand with improvements in the economy, or at least perceived imporvements.
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I completely agree with you.
My only point is that, particularly for the younger adult segments of the population, the "demand" is in part due to a choreographed and engineered sense of urgency to quickly commit to buy bigger and better homes & spend more money than they can easily / really afford (i.e., they get sucked into lower monthly mortgages spread out over a longer period of time, and as a result quietly lose 10's if not 100's of thousands in interest over the life of the mortgage...and this all assume that the economy continues to improve, which of course is never the case...things cycles). Realtors work on commission, and so have vested interests in inflated housing prices continuing ("If you don't buy now, this same house will cost you 20% more in a year!!"....the sales pitches usually don't incorporate the reality of an inevitable slowdown / reversal of the current trend), as do the builders, contractors, etc, etc.
The housing/ sub prime mortgage crisis in the States is really a testament to just how precarious the "Good Times" really are. As the realities of a slowing national economy finally catch up, the result is a million homes in foreclosure.
I guess all I'm trying to say is that in both cities some of the record setting increased hosing prices is reflective of the underlying healthy economies and some is an exagerated and inflated bubble that sooner or later will deflate.