[quote=CA renter]
Wages/jobs are much more important to most working people than asset prices (usually only their houses and maybe some stocks in their retirement plans). Without wages, they cannot live. If asset prices fall, it might not be pleasant, but at least they could survive just the same as when their asset prices were higher.
NOBODY should be taking on more debt while using “rising prices” as an excuse. You are NOT “extracting equity” when you cash-out or get a HELOC. What you are doing is taking on more debt than anyone would be willing to lend to you under normal circumstances, because you are giving them the right to foreclose on your house if you default. Once people get this through their thick heads, we can heal from this mess.[/quote]
Wages/jobs are important to most working people but inflation is also important to most working people with an asset like a house. I don’t care if my wage is flat compare to inflation, if I bought a house with a fixed rate and a fixed payment for the next 30 years, any inflation will make servicing that debt much easier. So, as long as I have a job and my wage continue to rise in nominal term (even if it only matches inflation), life will get easier. If you look at most people’s expense, housing payment is usually the biggest expense. If there’s inflation and wages goes up in nominal term, then the housing debt will become a smaller part of the take home pay as the years go bye.
Yes, I agree without wages, people cannot live. That’s why I think recession/depression is much worse. Even if housing and everything else get cheaper, if you don’t have a job, it won’t matter. Just ask those who have lost their jobs or are afraid of losing their job right now. Do you think they’ll jump in and buy a house, even if it’s a great deal?
I’m not even talking about take on more or less debt. I’m assume if you’re responsible and just taking on enough debt to get a place to live. I don’t know about you, but I wish i was old enough and could have bought a house in the early 70s, before all those inflation took place. I’m not sure if I want to buy a house in 2005, 1990, etc. before the recession takes place.
