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- Our Changing Relationship to Debt
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Waiting on the World to Change — John Mayer
The next big psychological change to impact housing will be a change in homebuyers relationship with debt. Equity can be created in a home in two ways: you can pay down the debt, and the house price can appreciate. During the bubble rally, it was not fashionable to pay down debt. It is a slow way to build equity, and it requires sacrifice. During the bubble, appreciation happened much faster, and it required no additional funds to go toward a housing payment. Under those circumstances, only the most fiscally disciplined and conservative paid down their mortgage (and they are the only ones whose house is not in jeapordy.) As the price decline drags on — which it will for several more years — people will come to realize that equity does not appear magically, but it is only obtained through retiring debt.
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Original Source:
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31 July, 2008| housingblogs |
@ 12:30