Sometimes pain is good
Bookworm on Aug 20 2008 at 12:11 pm | Filed under: Uncategorized
There is a reason why it’s periodically useful for hyper-inflated real estate markets to correct:
A pair of reports released Tuesday highlighted the upside of the real estate downturn: Housing is becoming more affordable for more people across California and the Bay Area.
The percentage of households able to buy an entry-level residence in the state reached 48 percent during the second quarter, double the level from a year ago, according to the California Association of Realtors.
You can read the rest here, but any yahoo could have figured this cause and effect equation out on his or her own.
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One Response to “Sometimes pain is good”
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I think it’s really questionable whether housing price increases/decreases should be considered to be increases/decreases in the national wealth. (Excluding changes resulting from actual physical improvement or deterioration.) Since the vast majority of housing transactions are between Americans, housing price increases are basically intergenerational transfers in one direction, and housing price decreases are intergenerational transfers in the other direction.
Fairly good analogy with P/E multiple expansion in stocks.