News1 min ago
Why Are Cheaper Houses Bad News?
23 Answers
Just quoting the latest Mark Carney "why Brexit is wrong" propaganda piece. Apparently house prices could fall by 30%. Aren't cheaper prices for basic commodities supposed to be good? And most especially for the poorest in our society?
If I were a twenty-five year old I'd be rather happy about cheaper houses. But I'm not a youngster; don't have much faith in fortune cookie Carney; and am selfishly concerned about the artificial wealth I as a retired home-owner enjoy because of the asset-inflation created by the Brown's and the Carney's policy of quantative easing.
What have I got wrong logically, economically, or morally in this line of reasoning?
If I were a twenty-five year old I'd be rather happy about cheaper houses. But I'm not a youngster; don't have much faith in fortune cookie Carney; and am selfishly concerned about the artificial wealth I as a retired home-owner enjoy because of the asset-inflation created by the Brown's and the Carney's policy of quantative easing.
What have I got wrong logically, economically, or morally in this line of reasoning?
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If house prices fall many people get in the situation where the value of their property is less than the remaining mortgage. Since you have to pay off the mortgage before you move you end up stuck. At the end of the last century this situation arose and we had people from Luton renting the house next door to us and renting out their own home. The properties had similar values but, since house prices had fallen, they owed more on the Luton house than the value of it so they couldn't close the mortgage. The fact that the mortgage on a house near us would have been smaller was irrelevant.
//Just quoting the latest Mark Carney "why Brexit is wrong" propaganda piece//
The Bank of England is legally independent of the government. Why on earth do you think they would be lying?
There is genuine evidence that the brexiters lied before, during and after the referendum. Unfortunately, offering any kind of evidence to the pro-brexit mob is like arguing with flat-earthers: they would rather believe the most complex and ridiculous conspiracy theories in the face of all evidence than face the simple truth that is right under their noses.
The Bank of England is legally independent of the government. Why on earth do you think they would be lying?
There is genuine evidence that the brexiters lied before, during and after the referendum. Unfortunately, offering any kind of evidence to the pro-brexit mob is like arguing with flat-earthers: they would rather believe the most complex and ridiculous conspiracy theories in the face of all evidence than face the simple truth that is right under their noses.
Another problem caused by negative equity is there is no longer an asset value for the property concerned - more is owed on it than the property is worth.
This means that if anybody wished to start up a business and the bank required security for the advance, then the property would no longer be accepted as collateral.
Hence, many new businesses would not get off the ground, and some new jobs would not be created.
This means that if anybody wished to start up a business and the bank required security for the advance, then the property would no longer be accepted as collateral.
Hence, many new businesses would not get off the ground, and some new jobs would not be created.
Any sudden change in the value of something you own can be bad news. Gradual changes can be coped with but sudden oned hit individuals. Sharp rises hit those wishing to purchase but suddenly see that which they saved for yanked out of reach. Sharp drops hit those who bought at a higher price and have either scraped to pay for it, or finding themselves still owing more than it's now worth. As for the wealth being artificial, if quantative easing has devalued the money you'd be paid for the asset, a price drop is a second hit on you, on top. Property prices rise due to demand. But one must keep in mind that this topic is being discussed because if another highly unlikely doom & gloom scenario being pushed in the hope of getting the gullible to tie us into an EU with no say in anything.
His report may have been at the request of the government "legally independent" means they have no control over the content of the report.
Now that my mortgage is paid off, I wouldn't be too worried about a value drop provided it went right across the market so that it didn't affect my future plans. I well remember the last housing price crash, the many families made homeless when their homes were repossessed and the struggles of those who managed to stay in their homes but were literally losing money as they paid their mortgages.
I am not going to do the "twelve of us lived in a shoebox" schtick but when we took out our first mortgage, it was mortgage OR holidays, luxuries, meals out and so on. I well remember one day before payday when it an omelette for dinner. I burned the omelette and we ate it because it was that or nothing. It was the same situation with our friends. We didn't starve but money was tight for a few years. I don't know enough about the finances of young people today to know if they are prepared to do the same thing.
Now that my mortgage is paid off, I wouldn't be too worried about a value drop provided it went right across the market so that it didn't affect my future plans. I well remember the last housing price crash, the many families made homeless when their homes were repossessed and the struggles of those who managed to stay in their homes but were literally losing money as they paid their mortgages.
I am not going to do the "twelve of us lived in a shoebox" schtick but when we took out our first mortgage, it was mortgage OR holidays, luxuries, meals out and so on. I well remember one day before payday when it an omelette for dinner. I burned the omelette and we ate it because it was that or nothing. It was the same situation with our friends. We didn't starve but money was tight for a few years. I don't know enough about the finances of young people today to know if they are prepared to do the same thing.
From Wikipedia:
"The Bank became an independent public organization in 1998, wholly owned by the Treasury Solicitor on behalf of the government, but with independence in setting monetary policy.
The Bank is one of eight banks authorised to issue banknotes in the United Kingdom, has a monopoly on the issue of banknotes in England and Wales and regulates the issue of banknotes by commercial banks in Scotland and Northern Ireland.
The Bank's Monetary Policy Committee has a devolved responsibility for managing monetary policy. The Treasury has reserve powers to give orders to the committee "if they are required in the public interest and by extreme economic circumstances", but such orders must be endorsed by Parliament within 28 days."
Independent but owned on behalf of the government.
Has to take government orders.
But usually left to make decisions that rightfully should be the government's job.
"The Bank became an independent public organization in 1998, wholly owned by the Treasury Solicitor on behalf of the government, but with independence in setting monetary policy.
The Bank is one of eight banks authorised to issue banknotes in the United Kingdom, has a monopoly on the issue of banknotes in England and Wales and regulates the issue of banknotes by commercial banks in Scotland and Northern Ireland.
The Bank's Monetary Policy Committee has a devolved responsibility for managing monetary policy. The Treasury has reserve powers to give orders to the committee "if they are required in the public interest and by extreme economic circumstances", but such orders must be endorsed by Parliament within 28 days."
Independent but owned on behalf of the government.
Has to take government orders.
But usually left to make decisions that rightfully should be the government's job.
Doesnt matter what it is supposed to be, actions speak louder than words.
To be fair to Carney on this one though this is worst case scenario. Undoubtedly there are other scnarios from this to the rosiest. However either they are not released or the MSM choose to ignore them as they wont spell the Gobalist message of fear.
To be fair to Carney on this one though this is worst case scenario. Undoubtedly there are other scnarios from this to the rosiest. However either they are not released or the MSM choose to ignore them as they wont spell the Gobalist message of fear.
Sorry, didnt answer the quaestion.
Pretty much as said above. House price falls are ok within reason but to leave large swathes of youngsters in negative equity is not good.
As for the pund dropping, that will make British goods cheaper to manufacture so potentially there is opporuntity for foriegn investment there, leading to more jobs.
Simply, no one knows. But then we dont know the consequences of remaining either since the EU is marching forward with it's super state ideals (As I think it must to work).
Pretty much as said above. House price falls are ok within reason but to leave large swathes of youngsters in negative equity is not good.
As for the pund dropping, that will make British goods cheaper to manufacture so potentially there is opporuntity for foriegn investment there, leading to more jobs.
Simply, no one knows. But then we dont know the consequences of remaining either since the EU is marching forward with it's super state ideals (As I think it must to work).
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