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Invisible Sun's avatar

My observation is it became very fashionable in the past decade for the upper class to own multiple homes. My closest neighbor owns a beach cottage, a house in Florida and now two houses in Maryland. They are trying to sell one of the Maryland houses but put it for sale post the current cycle peak and now it languishes.

I have many friends and family in Utah and they speak of it being quite normal for people to own a second home, typically in the warmer climate of Southern Utah.

The QE / ZIRP policies of the past decade made owning real estate a very attractive investment. One got to own an asset that not only was appreciating in value but also provided cash flow as a VRBO / AirBNB rental and a promise of a large return if the house was ever sold.

What happens as home are purchased for personal use, personal investment and short term rental? The supply of homes available to live in decreases. But demand for housing grows as people (a) need a place to live and (b) there is always the desire to join the investment trend.

If we see a crash in housing prices over the next several years, will the "experts" recognize that bubbles exists? Will they acknowledge the damage caused by QE and ZIRP?

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derek's avatar

I'm having trouble following figure 5 and the explanation. Is it information that there are labels on the left side of the line for some and the right side for others? Where can I see in the chart that "Prices everywhere declined, but rents didn’t" in 2007-2012?

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