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Originally Posted by someone123
The ones who will be hurt the most if that happens won't be the people with lots of equity, it'll be the highly leveraged ones. That will skew more toward more recent and younger buyers.
Sometimes different portions of the market are affected differently as well. The low end condo market often doesn't do the same thing as well-located houses or outer suburbia for example.
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Actually, the ones who will hurt the most are the ones who move every few years. They never seem to renew,just move. So, if their home is devalued significantly, It will hurt them.
The highly leveraged ones may feel the hit, but so long as they can keep their debts afloat, should be able to ride this out. However, what we may start seeing is people selling of their toys; ATVs, SXS, Sleds, RVs, etc to make their finances work.
Quote:
Originally Posted by yaletown_fella
It always irritates me when politicians spout nonsense along the lines of "Everyone should be able to achieve homeownership so they can have access to only proven way to build intergenerational wealth"
They are completely ignorant to the reality that housing has only seen such exorbitant nominal gains because it's nothing more than a giant asset bubble from the last 2 decades of artificially suppressed policy. Real rates are still negative when you account for the fact that the CPI is so heavily manipulated. Indirectly robbing from savers to prop up nominal asset prices is the foundation of this shell game.
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When most people live paycheck to paycheck and then die, the only things passed on are their homes.
Quote:
Originally Posted by someone123
I was talking to an older person about housing and intergenerational issues a while ago. Her perspective was that young people are doing really well as long as they work hard; she judged that according to the kinds of degrees the younger people had and professions they were going into. She said that it was hard to save for a house back in the 1960's too, and one of the keys to success is to make sure you get a job with a good pension. She worries a lot about her wealth and equity; she is wealthy but is concerned that she will end up with some kind of profound medical issue late in life that will require expensive round-the-clock care and costs hundreds of thousands a year. In order to plan for this, in theory, you need millions of dollars even in your 80's. She also feels she is on a fixed income (she can't work anymore) and is losing buying power to inflation, and so is economically pressured.
This view makes sense given her experience but it's out of touch with the life for younger people. The degree doesn't really mean much and a lot of white collar jobs don't give you a salary that allows you to buy much of anything right now. Some jobs have pensions but the return is generally much lower than for those who were working in the 60's and 70's.
There is also the psychology of being older, not knowing how long you will live, and watching your wealth shrink rather than grow as you spend it.
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This highlights the problem with the largest generation being retirement age or older. They forget how hard they really had it, but only see how hard they will have it and will want the government to do something.
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