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Are Rising Home Prices a Good Thing?

The Dark Side of Rising Home Prices

“I guess I don’t buy your premise, its a pretty unlikely possibility, we have never had a decline in housing prices on a nationwide basis ” Ben Bernanke July 2005 responding to a question that housing prices might come down.

Bernanke was correct in saying at the time* that there had never been a decline in housing prices on a nationwide basis. What he was oblivious to was that home prices were rising nationwide faster then they ever had because his predecessor Federal Reserve Chairman Alan Greenspan had brought the Fed Funds rate down to 1%. By mid 2007 the housing market party was over and prices began a four year nationwide decline.

Fast forward to 2013: Mr. Bernanke has learned that you can reheat an economic souffle. We are in the midst of another housing bubblet driven by Ben Bernanke’s Fed Funds Rate at 0% and massive doses of quantitative easing (QE) that involves the Fed buying $85 billion a month worth of mortgage backed securities and U.S. Treasury Securities.

The Dark Side

While the Fed and others cheer on the rise in housing (and stock market) prices as good for homeowners and the economy, there is a dark side to rising home prices.

Rising Home Prices: http://smaulgld.com/the-dark-side-of-rising-home-prices/

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Rising prices

are really NEVER a good thing for any good or service as a general statement. The inflation that has occurred over the past 100 years has led to rising prices and has destroyed America and left us with what we have now. The price of your house may go up at times and you may feel richer but it hurts and further warps the economy and is always temporary if not based on real supply and demand. Speculators may get rich flipping houses, but people's grandmothers have to live on cat food and social security because of it.

"Endless money forms the sinews of war." - Cicero, www.freedomshift.blogspot.com

agree people would be really outraged at the fed

if for example their policy was to drive gas prices higher (it does but that's not their stated policy)-they do state they want " a little inflation" and rising home prices

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I am reminded of the forecasting prowess of Ben Bernanke

from the clip in this blog post (and video)
“I guess I don’t buy your premise, its a pretty unlikely possibility, we have never had a decline in housing prices on a nationwide basis ” Ben Bernanke July 2005 responding to a question that housing prices might come down.

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No Housing Bubble

It's much, much harder again to get a mortgage now than it was during the bubble and rates are going higher. Besides, there's still too much fear out there of a housing bubble.

Bubbles happen when fear is replaced by the sentiment that the price of something, whatever it is -- stocks, real estate, oil, precious metals -- will keep going up and up. Case in point, the recent gold bubble.

Lies are falling out of fashion?

I read up to the point where the statement was made that:

______________________________________
Rising Home Prices:

Are Artificial
______________________________________

When the victims of these crimes perpetrated by these criminals finally have had enough of it, it seems to me, the former victims will no longer use the false words that cover up the false currency.

Rising Home Prices:

Are examples of inculpatory evidence proving the fact that a crime is in progress.

Follow the fraudulent money to the source and there are the criminals caught red (a "Central Bank" fraud is part of that dreaded "Communism" fraud don't you know) or in this case green handed.

Joe

Rising house prices

Are good if you own a house and bad if you don't.

If you are lucky enough to buy one before cheap easy credit causes inflation that can wipe out the real value of your loan then go for it just as long as you have a stable job to pay it off before the credit tap is turned off.

But in the long run a stable economic system would be better for all as you would have to actually pay off the loan with your money earned instead of making profit off a ponzi scheme of cheap credit.

Lord Acton, Lord Chief Justice of England, 1875 - "The issue which has swept down the centuries and which will have to be fought sooner or later is the People v. The Banks."

It's a long story

but basically I inherited the property and 340k in debt when the trustee of my folks estate found a loop hole and turned out to be not so trustworthy after all. Not only did he force the sale of a house my father mortgaged this property to buy for his granddaughter and great-grandson he has worked against me trying to keep this property too. I have been fighting this for 2 years and I'm quite literally at the end of my rope.

Garnet
Daughter of 1776 American Revolutionists

I'm gonna say yes for me..

After thinking long and hard.. shedding some tears along the way.. I've pretty much made up my mind to sell the house and property that has been in my family for over 50 years. I want out of California badly and I'd been thinking of moving back south where I have family but after talking it over with my truck driver bf I'm thinking about going north to Montana or Colorado. House prices going up here would mean I could pay off what I owe with some left over to start over.

Garnet
Daughter of 1776 American Revolutionists

Supply and demand

If the money supply was static, then prices would only go up only when demand increased.

The number of vacant houses is basically the same as 2008, and demand has not increased, mainly because we have the same number of people.

Any increase in prices without any decrease in vacancy is the doing of The Fed and The Treasury.

"Timid men prefer the calm of despotism to the tempestuous sea of liberty" TJ

No

Because this means all else will too including all taxes and liquid refreshments imo.

donvino

Rising house prices are good

Rising house prices are good if you already bought a house, especially if you owe a big mortgage on it. Then you can feel real smart for using leverage to buy an appreciating asset. Rising house prices are bad if you want to buy a house, especially if you're going to have to borrow a huge amount of money to do so.

All in all it's a zero sum game. Strangely, nobody thinks its a good thing to have rising food prices, rising car prices, rising health care costs, rising tuitions, or rising gas prices. But somehow rising house prices are supposed to be a wonderful thing.

I own a house. I paid cash for it. I like where I live and hope to stay here forever. Of course I still have to rent it from the government (property taxes). A house is a very expensive thing, and it always needs maintenance. So be rational about it. For some people it makes sense to own a house, and for others it doesn't.

Rising food prices are a good thing

if you're a farmer. Rising car prices are a good thing, if you're a car dealer. Rising health care costs are a good thing, if you're an HMO. Rising gas prices are good if you're a big oil company.

And death is a good thing, if you're a maggot or a vulture. Which brings us back to the subject of Ben Bernanke . . .

As you say, he plays a zero-sum game. One man's loss is another's gain. Figure out WHOSE, and you'll know why the Fed does what it does.

Recommended reading: The Most Dangerous Superstition, http://www.amazon.com/Most-Dangerous-Superstition-Larken-Ros...

I will never buy a house, and

I will never buy a house, and barely anyone buys houses. If you take out a mortgage or a loan on something, you're not buying it. I will not even get a mortgage. I only see a point in renting. You can't own it anyway (property taxes), and there is such a disparity between wages and home values.

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I own my house ramicio.

And I don't pay one cent in property tax. In my state if you have a homestead and the valuation is below 75 or 100 thousand (I think they increased it) then you don't pay property tax. That is one of the main reasons I moved back here when we closed our business in Texas.

There is a give and take though. We have an income tax and the local sales taxes can top %10 depending on the little town you happen to be buying at. But if I ever have too I can live off of my land and not have to worry about having my property seized for back taxes.

Of course this could all change with the stroke of some political pen but for now I own my house and property.

Do you have a land patent or

Do you have a land patent or do you have a deed?

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Good question

And to be honest I would have to pull my paperwork out of my safe to be sure. Regardless of which it is though if someone wanted to buy this property they would have to come to me because I own it plain and simple and I do not have to pay annually to retain ownership.

If you have a deed you are a

If you have a deed you are a tenant and the state (QEII) owns it. Even with a land patent they can come take it at any time they want, although they would have to use more force in that instance, but with one they can't charge property taxes because it lists you as owner and not tenant.

I have a title for my car. A title is not created by the manufacturer, it's created by a state. If you have a title for your car instead of the original manufacturer's certificate of origin and bill of sale it is state property and it's why you must register it, insure it, inspect it, and be licensed to use it. Roads are public property, and grey law like the states have created have made it so that you're no longer using your property to travel, but theirs. But try driving with just a MCO and see where that lands you, even if the law is on your side, a judge won't care and let a mere slave tell him or her the law.

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Not buying it

I've seen people here say "If you take out a mortgage or a loan on something, you're not buying it." I'm probably not understanding what they mean by this.

For example, I bought (or thought I bought) a house by putting some money down and borrowing the rest (a mortgage). Eventually I paid it off. Just before the last payment was made, was I still "not buying" that house? But then the day after that last payment was made, had I bought the house at that point?

And how do property taxes mean not owning it? I rent that house out now, so the current tenants pay me rent, and I'm paying a much lower amount in property taxes to the city. Who actually owns the house if not me? If I sell the house, I get the money -- not the city and not the current tenants. So it kind of *feels* like ownership. How is it not?

I still wouldn't call that

I still wouldn't call that buying it. I'd call it leasing with intent to own. Buying something is paying for it outright.

If you don't pay your property taxes they come take your land/house and auction it off for what you own in taxes. How do you own something if you must pay taxes on it or it can be forcibly taken from you? You're a tenant and the state is the landlord. A deed is not proof of ownership, it's just proof of who is tenant. Paying taxes on something once when you buy it is one thing, but a bill every year that you must pay or you are forcibly removed from the land is a whole other thing.

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the part about the taxes is

if you don't pay them the town can put a lien on your property and eventually take it from you. I suppose the same could be said if you don't pay your storage fees for your gold, they will sell your gold

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I'ts as if the County or State acts as a landlord.

Is property tax a fee charged because owning property is a privilege, not a right?

Failing to pay the fee rescinds the privilege of ownership?

If there is to be a government: What is it's proper role?

Free includes debt-free!

the difference in the storage example

is you can choose not to pay your storage bill and still keep your gold by moving it elsewhere but with a home if you don't pay you cant move the house to another state!

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Well

probably just nit-picking here but if the gold is being used to secure payment, then presumably the contract says that you can't take the gold out if you are not current on your payments. Like one of those garage-like storage units, where they'll seal it and not allow you access if you're far enough behind on payments, and sell off the contents if you don't make it current. It doesn't mean you don't own the contents of the unit.

Responding to your other comment, yes there are a lot of relevant difference with taxes, compared to storage fees or construction liens or other ways that property can be used to secure a debt. Presumably in an AnCap society (feel free to correct me, AnCappers!) someone could create a subdivision and sell off plots of land with contractual obligations about paying for the shared roads and sewer and whatnot, with the property being used to secure that obligation -- so if someone didn't keep paying, they could be compelled to sell the property. The obvious difference is that it's voluntary, but this kind of arrangement wouldn't mean that you don't own the land.

If you can sell property, and pocket the net proceeds, you're not the tenant you're the owner.

a point that I think you are

a point that I think you are missing is that you are not "paying" for the house if you are using FRN's, therefore you have not purchased anything according to law. plus the deed has you clearly labelled as the "tenant". what you receive is "equity" title, which does make it private property as long as the contract is valid, but miss a tax payment and the owner will evict you. Just like renting a hotel room, it's your private property legally during the term of the contract. One of the requirements for a contract to be valid is "equal consideration" meaning both parties have to bring something of value into the contract. One side brings a house and one side brings a stack of debt notes from a third party. does that meet the requirements of a valid purchase contract?

if that's the idea

then I wouldn't call it "not owning" the property. I can still sell it, pay the tax bill, and pocket the net amount. I think the person who gets the money when something is sold (net, after paying off any debt secured by that thing) is the de facto owner of that thing.

The analogy to storage fees for gold is interesting here. If they sold the gold to pay for your storage fees, you'd still get the net proceeds from the sale after the storage fees are paid.

Or back to real estate, if you hire someone to do some remodeling and don't pay them, they might use a construction lien to force you to either come up with the money or sell the house. It would be an odd use of the word "own" to say that the remodeling company "owns" the house simply because the debt is secured that way.

I suppose ownership of any asset comes with costs

if you don't take care of an asset your self or pay someone to do it for you you will lose the asset or part of its value,
I think the tax thing is different as it is imposed and is not directly pertinent to ownership-although one may argue without the taxes the home might be worth less as there would be no fire police or schools
That leads to an entirely different argument

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why would you think people would not seek

Protection from fire, crime, and ignorance just because the state quit forcing you to pay property tax? That's the 'ol "who will build the roads?" garbage. Of course people would seek those things from private companies or individuals... and they could afford it if they were no longer being taxed to death on the things they "own".

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they would

I was just giving the rationale that the state makes to justify property taxes. The argument is you cant own it all on your own because its value and the value of other homes wouldnt be worth any thing without our property tax paid for services

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they makeup the disparity

between wages and home values by loaning you money

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Yeah, and I don't buy into

Yeah, and I don't buy into the debt thing, nor do I accept doing things at a job that requires me to do things against my convictions, so people like me are going to just die off naturally.

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