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Author: jiml8 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 10551  
Subject: Re: 'Is forewarned forearmed?' Date: 5/29/2003 12:20 PM
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The most enduring solution would be job growth - but that ain't likely anytime soon. The other is the 'wealth effect' - rising values of property and investments. Which was what drove the boom in the first place. Housing certainly is doing its share with the help of all time low interest rates. Now we have to see whether investor psychology can do its part in rebuilding confidence to venture forth into the market again. The tax cuts need to start paying off.

Don't forget savings.

Far, far too many people are tapping equity to fund lifestyle. This is a game that has a definite end; when the equity is gone and the borrower is maxed out, then he'll stop spending and start paying back if that is possible for him to do.

In the meanwhile, the housing boom is being driven by a combination of gov't homeowner programs and low rates.

Well, rates can't go much lower, and everyone who is breathing and not a credit basket case has been able to obtain a mortgage. So, while single family housing for the time continues to show adequate strength, foreclosures are also at an all-time high and the commercial sector in many regions of the country (including mine, unfortunately) is in bad shape.

This housing cycle is past due to end. What happens then?
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