Beware Those Obvious Conclusions

Article Excerpt

For years, people have talked about and worried about the boom or ‘bubble’ in real estate. Many take it on faith that dire effects await the entire economy when the boom ends — when real-estate sales slow down and real-estate prices quit rising or go into reverse. That’s partly due to the accompanying slowdown we can expect in the spin off economic activity of real estate sales — the money earned by real estate agents, bankers, furniture retailers, renovators and so on. There is also the shrinkage in the so-called ‘wealth effect’: if your house is gaining in value, you may be inclined to spend more on consumer goods, even if you have to borrow. Pessimists draw the obvious conclusion that when the boom ends and home prices quit rising, all this related spending will end too, and eliminate a source of fuel that the economy has come to depend on. However, obvious conclusions can be misleading. Obvious to most everybody Most people recognize…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.