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Sunday, December 21, 2008

Housing bubble 

Atrios writes:
. . . all you had to do was look at home prices, look at incomes, and realize that not enough people actually made enough money to afford those mortgages. . .
It is the mantra of our generation that real estate always goes up -- except when it doesn't.
When we would watch those home flip shows over the last couple of years, and we would see somebody pay half a million dollars for a three-bedroom bungalow in Las Vegas or Atlanta or Pittsburg, then flip it for three-quarters of a million, my husband and I would wonder who in the world was buying these ordinary houses for that much money.
In other housing markets we had seen, there was outside buying pressure which raised prices, but this didn't seem to be the case in the States. So we thought maybe Americans must be somehow just so much richer than us Canadians.
Now, of course, we realize it was just people like us who were suckered into some bizarre mortgage scheme, blinded by the belief that they couldn't lose because house prices were going to keep going up forever.

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