The Real Estate Bubble is Real and Bursting

Subject: The Real Estate Bubble is Real and Bursting



The Real Estate Bubble is Real and Bursting
By Tom Ball, 2006-04-19 14:46:49
Section: Frontal Lobe

As with most economic issues of national and global
significance, their percussive consequences are rarely
felt in most people's pockets until months or even years
after an event has unfolded.

Often, the possibility of such negative personal effects
are denied or rationalized until all is lost and past inaction
is regretted. Such is the case with the hotly debated U.S.
real estate 'bubble'. Does it exist or does it not? Should
we care?

Those who care will be determined by each person's
respective positions in the market as well as his or
her associated [in]tolerance level for market volatility.
That said, there would be some elements of the housing
boom and bust that clearly affect us all.

For example, about 25% of all jobs created since 2001
have been either the direct or indirect result of the
housing boom
[http://quote.bloomberg.com/apps/news?pid=10000039&cid=baum&sid=aCxs0tcvCFFM].

These include jobs in construction, real estate and
mortgage finance. What happens to these jobs if
the boom goes bust? Also affecting everybody is
the potential for an overwhelming loss of national
wealth.

Though for many, the rather ambiguous concept of
'home equity' sits only peripherally on their household
balance ***, it generally accounts for the majority of
a family's total wealth.

A significant reduction in this asset would inevitably
inhibit a family's propensity to spend their disposable
income as freely as they had in the past. This is true
regardless of whether or not the homeowner had
considered 'cashing in' on their property's inflated
value.

This negative effect would likely be augmented for
those hoping to realize their home's equity either
through a home equity loan or through selling the
property.
http://www.politicalcortex.com/story/2006/4/19/144649/999

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