There are three principal reasons:
The first reason, of course, is a classic. It was the argument based on "fundamentals" that there was a bubble in the first place.
The second and third are subtle, and the interaction of the two is equally subtle.
Basically, most of the money that Baby-Boomers need for retirement is in their houses. They have to sell that to someone in order to retire in the first place. That someone cannot be a younger person since they simply don't have the income to support the outlandish prices.
Yes, this is just a repeat but most of economics is the same ol' shit that you have to repeat again and and again and again and again till you are blue in the face because it never changes but somehow people never ever seem to get it.
2 comments:
Going by "rents are cheaper than the prices" it is a big bubble in Indian realty also. The supposed price a property can fetch will give you more money in interest that you can probably get renting it out.
If houses abutting slums are selling for more than Central Park West, you can best every single last dollar (and any that you can borrow as well) that you are experiencing the Mother of All Bubbles.
Indian real estate will end very badly (just like China.)
Post a Comment