How long do you think we have got? I have explained in my book. Page 57 onwards why it will not work. http://morganisteconomics.blogspot.com/p/publications.html
That's a tough question. IMO we are in the downward slide right now. In reality, we've been there since the mid-70s, but the ability to leverage and print has masked it. My current feeling is that we slide, slowly, oscillating lower highs lower lows, until an unexpected event cracks everything wide open and we step-function to the bottom. The problem with unexpected events is they're hard to time. But my gut says it'll happen within 10 years.
If you have a mortgage, you can now re-finance (again), and have more cash in your pocket. If you're building (or thinking about building) a factory, you can borrow for less. You're lowering borrowing costs, period. Whatever you're not paying in borrowing costs, you get to use elsewhere.
You gain a few things for the extra 250. #1 You are not on the hook if the property of the house implodes. I bet those renting from 2006 till now are doing well for that 250 they spent not to take such risk. #2 you gain mobility, Find a better job in a different state, you can pack up and move. But the homeowner is stuck, they might have to give up a 15K raise for example because they cannot sell the underwater home they just bought. #3 No repair risk, if that 5K Split system fails and needs replacement, you call up and they have to fix it. They are on the hook for repairs etc.. When you rent you pay for the other person to assume risk. It is like going long a put, and the renter short a put and selling premium.
what they have been doing ? basically just two things. 1/Lowered borrowing cost to encourage customer spending.Idea is for you to refinance your house and spend the money . 2/ Lowering fixed investment yield so people living off those investment are forced to spend additional money or even sell off those government bonds for less and spend money on living expenses. This is also called " fucking retirees over again ".
I ran all the figures before I bought my home and renting vs owning came out about even. If housing prices rise you do a little better owning. If you are a good trader or reasonable investor you do a little better investing what you would have paid for the down payment. For me the decision to buy was quality of life, mainly stability for my children, but if I was single I wouldn't buy unless I enjoyed fixing things and could improve a house.
Rebuttal to your points... #1. Please tell me one place in the country where buying was cheaper than renting in 2006. If you can do that, i will show you a place that didnt experience a collapse in home prices. #2 Homeowner is not stuck. If mortgage is less than rents, they can hire a property manager and have them rent the house out. Now they have even more income than before. (Good try on suggesting that everyone in the world is underwater on their mortgage) #3 Fixing things is expensive, but guess what...if you rent YOU ARE PAYING for that $5k expense. Oh sure...you are not coming out of pocket 1 time for $5k, but you are paying that expense in rent every month. The average aircon lasts about 15 to 30 years. A roof also lasts about 15 years (up to 50 if its tile). Those are the biggest expenses you will get in a house. Assuming an average cost to replace a roof is $8k and air con $5k, thats $13k out of pocket every 15 years. That comes to an average monthly expense of about $72. (Average monthly repair over the life of a $225k house is about $100 per month) So you still come out ahead. The only time renting is better than buying is when rents are cheaper than a mortgage, of if you are a person that lives paycheck to paycheck and are the type to spend your money as soon as you get it and never save. Then renting is good for you. If renting was better than owning, why are their so many rich landlords out there and so many poor renters?
Would you look at owning a condo the same as 'land'? Obviously w/ land, it is different, and in the end over generations that 'land' is now oh so valuable. Your generations to follow WILL NOT need to deal w/ mortgages or a roof, and instead have FULL DISCRETIONARY SPENDING! Even if they rebuilt, it would always be for the better.
I've offered to give (not sell just give) my house and property to my kids and they don't want it. Too far out in the sticks. No job for their husband in the area, kids need a better school etc. But I agree, land is always good. I mean there is more to life than money. Even if you never build, sometimes it's nice just to have something to think about.
If you buy right, like now and not in a bubble, it becomes an enforced savings and in the long run a great wealth building tool. Anyone in their 20's or 30's who can qualify should be buying right now. They will be very glad they did so in 20 years.