[quote=Nor-LA-SD-guy]Yea except that our cities and state budgets were set at peak housing tax intake levels, then you have all the people who cannot/will not sell or fix or doing anything much to their main expense (and the main revenue generator) until they are above the price they paid regardless if the house is underwater currently or not.
As an example: Most people are not going out to buy a new car unless they feel rich or they have no choice, and then they will buy less car ect…[/quote]
And I’ll be the first person to say that those budgets need to be rolled back to ~1998 levels.
People should not be buying cars because their housing prices are up. They’ve been led to believe that the “equity” in their houses is their money to spend. It’s not, until they sell the house and downsize or rent. If they use the house as collateral for a loan (HELOC or cash-out refi), then that simply adds to their DEBT, it does NOT make them “wealthier.”
In order for everyone to realize this “equity” from their homes, they would all have to sell…and what would happen to their “equity” when they all decide to sell? That debt was only backed by peoples’ imaginations and fantasies about what they were worth. In order to pay off all that debt (because people could NOT pay it off from wages alone), the collateral had to be sold off…and the value of the collateral backing those loans would fall through the floor, which means that only a very limited number of people could actually use that “equity” to pay off their debts.
