回复：methinks probably half of this is bullsh*t

I ain't got much time to type a lengthy rebuttal but it just seems whoever wrote this stuff naturally often count on others' stupidity:

For example, does it mean to say that nobody takes 30yr fixed mortgage and instead take ARM as their one and only option? and if anyone takes a 30yr fixed, the inflation does not make it easier to pay for the same damn fixed payment monthly 10 years from now?

So shall I just sit my butt tight and rent for another decade and then use my inflated salary to pay for an inflated house, assuming I don't lose my jobs for life because I am on cracks?

I mean, this whole post used way way way too much assumptions for the far-fetching conclusion drawn. It's probably not all bullsh*t but it's not worth much really. It mostly just describes phenomenon and that's it.


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# "Housing is a hedge against inflation, so you should buy now anyway."
FALSE. Interest rates go up with inflation, and higher interest will be the last straw for ARM mortgages in the Bay Area. Their defaults and foreclosures will drive down the cost of housing for everyone else around here. Remember that 82% of recent Bay Area mortgages were adjustable. There is little chance that salaries of ARM owners can keep up with inflation because of two billion people in India and China who would be happy to do their jobs for much less money.

# "Houses always increase in value in the long run."
FALSE. House values are actually constant. Adjusted for inflation, prices in Holland, for example, rose less than one quarter of one percent annually in the 350 years since their tulip bubble. Warren Buffett and Charles Schwab have both pointed out that houses don't increase in intrinsic value. Unless there's a bubble, house prices simply reflect current salaries and interest rates. Consider a 100 year old house. Its value in sheltering you is exactly the same as it was 100 years ago. It did not increase in value at all. It did not spontaneously get bigger, or renovate itself. Quite the opposite - the house drained cash from its owners for 100 years of maintenance and taxes. Its price went up about as much as salaries went up.

My grandmother always used to complain about the cost of milk. "Why, when I was a girl, a gallon of milk cost a dime! Just look at how much people are overcharging for milk now." I asked her how much people got paid back then. "Oh, about $15 a week", came the reply. Hmmm, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

所有跟帖： 

• sorry dude, sounds like you're stuck with the -mnosense- ♂ (215 bytes) () 01/20/2007 postreply 21:32:24

• 回复:sorry dude, sounds like ur stuck with ur subjective mind -novosti- ♂ (208 bytes) () 01/21/2007 postreply 21:43:33