The Phaserl


It’s a Lose-Lose-Lose Deal for America: How Real Estate Bubbles Push Rents Higher

Central Planning pushing housing prices higher is not win-win–it is lose-lose-lose.

by Charles Hugh Smith,

The Status Quo views real estate bubbles as a “good thing”: as home prices rise, the homeowner’s collateral (equity) rises, creating both a psychological “wealth effect” (now that we’re richer, we can afford to borrow and blow more money) and a temporary (and thus phantom) increase in collateral that will support more household debt.

What few seem to realize (or discuss) is how rising home prices push rents higher. This is an entirely pernicious effect, as renters aren’t getting any more “home” for the higher rent–they’re paying more money for the same shelter.

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