[quote=patientrenter][quote=sdrealtor]…most primary homebuyers do not, never have and never will pay cash….[/quote]
Make that most modern American homebuyers.
It is sad that a practice – financing – designed to allow some people to temporarily stretch beyond their means to buy a home has become so ingrained that modern Americans think it’s normal. If home prices were not inflated by a host of government interventions, and the practice of home financing were not subsidized in any way by the government, home prices would drop to a level at which many buyers could actually pay for the homes. By “pay”, I mean handing over one’s own real money… you know, the stuff you have in the bank, that’s not borrowed temporarily from someone else.
I agree, paying real money for homes at real prices is now an alien concept to most Americans. Home financing makes Wall Street – and existing homeowners and real estate agents – so rich that they have completely integrated it into our system and culture.
When China finally becomes a country with a normal level of saving, the glut of global savings will dry up. When that happens, a lot of the extra financing we take for granted today will shrink. Until then, we live in a world of inflated asset prices, held there by a wall of money from Chinese savers, mostly loaned to US institutions (like the govt) that then funnel it to the US asset markets.[/quote]
