we were advised to buy as much house as we could afford by our parents based on the assumption that our incomes would continue to go up. The value of the house going up was irrelevant unless we were selling and since we didn't buy with intent to turn it around quickly, that really wasn't a consideration.
But I think you hit on something. There is this assumption that "it will be as it has always been" meaning houses will continue to climb in value and incomes will continue to go up. That's assuming stable, predictable growth. I think we've seen that we have not had stable, predictable growth for a long time and we need to plan accordingly. But lenders (who reap interest benefits and in the case of defaulting they get to forclose on property) don't suggest that because it cuts into their profits.
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timeasmymeasure
Buyer Beward
Date: 2008-10-20 02:59 pm (UTC)But I think you hit on something. There is this assumption that "it will be as it has always been" meaning houses will continue to climb in value and incomes will continue to go up. That's assuming stable, predictable growth. I think we've seen that we have not had stable, predictable growth for a long time and we need to plan accordingly. But lenders (who reap interest benefits and in the case of defaulting they get to forclose on property) don't suggest that because it cuts into their profits.
Buyer beware.