Re:The Great American Single-Family Home Problem
by sokoloff on Saturday December 02, 2017 @11:56AM
(#15832750)
Because many people can't budget or plan on a multi-year, multi-step horizon like you are expressing above.
For those people, if their house goes up in value, it represents an important source of financial security (if they haven't gutted it via refinancing and HELOCs for renovations returning $0.60 on the dollar, new cars or vacations)
Even for people with decent financial planning skills, the home is such a large investment and typically bought with 5-33x leverage, that a small price drop is dangerous to their position.
For those people, if their house goes up in value, it represents an important source of financial security (if they haven't gutted it via refinancing and HELOCs for renovations returning $0.60 on the dollar, new cars or vacations)
Even for people with decent financial planning skills, the home is such a large investment and typically bought with 5-33x leverage, that a small price drop is dangerous to their position.