“The real measure of wealth is how much you would be worth if you lost all your money.”
As you may know, the real estate market is an interesting one, specifically because no one really knows what is going to happen with it. It’s described as “unpredictable”. The general idea is that it could drop at any moment or rise at any moment and no one would have ever saw it coming.
The thing is – the real estate market is actually more predictable than people may think. If you pay attention to the past economic markets, trends and fluctuations; you can actually start to predict what markets will do.
The economic market and the housing market are very closely correlated. When one goes up the other goes up and when one goes down the other goes down.
Here’s a video that explains this concept very simply. If you want to know how our economy works but can never understand the complex explanations.. watch this.
You may or may not know our current economic and housing market stance – so I’ll help fill you in. In 2008 the markets crashed dramatically. They called it the biggest economic recession since the Great Depression. The housing market crashed first due some extreme cases of greed in the investment banking world (a conversation for another post). When investment banks collapsed, it caused interest rates to skyrocket. Less borrowing yet higher monthly payments. When this happened, people had less to spend so their spending decreased. Since spending is someone else incomes, incomes then dropped. Housing prices dropped down due to deflation. We were in a recession.
Right now in early 2017 we are on an upward curve. We have built ourselves back by controlling credit and interest rates as explained in the video above. However, what goes up – must come down.
If we go off of the short term and long term debt cycles we have learned about above then we may be able to conclude that we are in the expansion phase. Our evidence is the increased spending, higher home prices due to inflation, and lower interest rates.
So needless to say – a deleveraging economy may very well be in our near future. How intense and to what effect is unknown. I do take the information from the video above very seriously and I can personally envision how our economy is likely to play out based on the nature of our society. That is simply my opinion.
If your educated through the process than you will be okay. Keep on top of what controls you and know how to manage your assets. Know how to build your own wealth by supplying valuable services or products to society.
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