[quote=UCGal]I think you need to add another category.
People who have medium size mortgages and don’t mind of the price drops below what they paid because they are in the house for the long haul with full intention of paying off the mortgage and living in it till they’re hauled off to the nursing home or mortuary.
Our house is worth less than we paid (at least according to zillow.) But I don’t mind because we’re on track to have it paid off in 9 years and be mortgage free. It seemed ridiculous it was so expensive at the time. But I looked at the purchase as shelter/housing… not as an investment that could/would be cashed out. I think a more affordable/sustainable market is better for everyone. If 50% or more of household budgets are directed at housing, the non-housing portions of the economy suffer.[/quote]
Great post, especailly the part about housing being shelter, not an “investment.” Too many people still have the bubble mentality and think their houses will make them rich. They fail to take into account the fact that they will need to sell the house in order to realize the gains (HELOCs and cash-out refis don’t count because you get an equal amount of debt PLUS interest). If they sell the house, they will have to pay an over-inflated price to buy another house unless they intend to move to Detroit or some other low-cost area. And if everyone tries to cash-out at the same time, you’ll get a “foreclosure crisis.”
Anyway, JOBS are where the money should be. We need to completely refocus and make the non-housing portion of the economy what drives us as we go forward. You’re absolutely right about high housing costs being a negative in a healthy economy.
