Brief thought

[andrewducker]

I wonder if falling house prices are bad for the economy in a way I haven't heard mentioned - because they put people off from moving somewhere for a new job, because they can't sell their property without losing money.

Free-flowing workers are good for an economy, surely having the better-off ones stuck in one place must be bad for it.

Comments

[octopoid-horror.livejournal.com]

I like the way that people (I'm not referring to you here, not these days anyway) often have this weird assumption that property has an intrinsic value and it should magically be exempt from all the disclaimers you see on financial products.

If someone buys it with a view to selling at some point, and talking about losing/gaining money then they're treating it as an investment and, as such, more people should think more about that and what it means. Especially since you're buying it with debt in most cases. I mean, would most financial advisers suggest that people buy FTSE stocks with money that they borrowed?

That's not saying that buying property is bad, but that people still sometimes seem to talk about property in a dangerous way, without realising that referring to a property market means something.

[drdoug.livejournal.com]

would most financial advisers suggest that people buy FTSE stocks with money that they borrowed?

Well, there's a bunch of people making a lot of noise at the moment along the lines that young people should be doing just that - taking out huge loans and buying stocks. Look for Lifecycle Investing.

SFAICT it's an astonishing exercise in creating a model that looks like it gives you great returns ... but with an unquantified risk of it all going horribly pear-shaped that's not included in the model. Cos, you know, there's really no recent examples of that working out badly for people to draw on.

(For me, I do think it helps to think of buying a house as an investment, FWIW - but I am very risk-averse about large sums of money over long periods of time. I'm not banking on it yielding vast sums of cash to live on, but I am relying on the value of the house I have bought roughly tracking the value of a house, over the medium to long term.)