Economy Question ?

Question

I keep asking myself this question! Why do the people of the U.S. think home prices should go up and up, gas go up and up, food, medicine, etc all go up.

I realize that prices have to raise, but we have gotten out of hand.

It is impossible to have everything go up so high that you are now out of reach for so many Americans. And the future generations.

In the 70's you could buy a home with one income, now it requires two. So the housing problem isnt just poor lending but the greedy ba$tard$ now can't give loans so easily because of price and income ratio. Why did this great nation s***w it's people.

Why do we all blame only the goverment and not take responsiblity for our own greedyness as well. I think we are all to blame.

It started out with a few Realtors who decided to convince families that they could buy more expensive homes if they just include both incomes, and troted off with full pockets. (fact on this statment)

Do you really think the economy will recover soon?

Answer 1

People are poorly educated when it comes to economics in America.  Folks believe their home is an Investment. And in some respects, it is.. But as with all investments, valuations rise and fall. The problem is that people who see their homes as Investments don't like the "fall" part of the equation. They only acknowledge the Up Side of the equation.

The economy will recover from this housing crisis. The reason is that free markets work.. Once price levels reach a point that buyers begin to outnumber sellers, prices will begin moving up. But for now, prices are moving lower and that is because sellers still outnumber buyers.

Answer 2

at this rate we will go into a depression stage.. but hopefully barrack obama will become president of 08 and try to change things around. as long as we keep having democrats as president and keep these republicans out. then we will be back on our feet.. but foreal only time will tell....

Answer 3

There are many different things going on. We have inflation, that is an increase in the cost of living, but in principle it should not effect living standards because wages are suppose to rise at the same rate as prices.  We have just experienced a speculative bubble in the housing markets in many cities, but home prices are now falling back to more reasonable levels. However average homes are bigger and include more amenities today than they did 30 years ago so they cost more in inflation adjusted dollars. Now we expect to have  air conditioning, dishwashers etc, but 30 or more year ago  many people did not have them. see

http://www.visualizingeconomics.com/2008...

The biggest problem faced by many families today is that wages  for most people have kept up with inflation but not increased with the growth of the economy, and so only the top 20%  can afford  the improved life style that  economic growth has produced with only one income.  This is particularly true in large cities with a large number of high income people who bid up prices in "good" areas.