I was wondering what you think will happen in the US regarding housing. I don't understand if we have hyperinflation how people will be able to afford their rent or mortgages. If prices for food and gas and clothing double or triple, and local / property taxes increase to enable the local government to stay in business, then I can't afford my mortgage. But if I lose my house, then how will I afford rent, when the costs for the owner of the apartment will be in the same shoes? I am thinking that the federal government will have to pass some law whereby instead of being evicted from our homes, the banks will be required to let us stay on as renters, with some sort of deal to make it affordable.... What insight can you share, as a landlord yourself?
I’m no landlord, I administer some property for my family but don’t own it myself, at least not exclusively. :-)
A number I would live by regarding prices is 50%. After the REAL price drops to ½ , investors usually start getting interested. That’s what happened in the 30’s and in most other crisis and economic collapse. Now, before you comment with a 80% price drop, read again. I’m talking about REALISTIC prices, not over inflated ones. Here in Spain, close to Barcelona for example, a good but small 2 room flat will cost 300.000 Euros . Now is that realistic? No, not in my opinion.
Why not? Because if you compare the property, its size and location to similar properties in similarly important cities, you notice the price is still inflated a lot. The real price would be around 200.000-250.000 USD, but not more. 50% of that is how far it would be likely to drop during a crisis.
A development in the middle of nowhere that starts turning into a ghost town? Well, my friend, maybe it was never worth the 300.000 USD you paid for it. Location, location, location.
Crisis+Bad enough location, it may not be worth nothing at all.
Mike, the answer to your questions is simple: You just turn poor. You end up in welfare, you end up living under a bridge for real. That’s poor around here.
There may be some new deals made b the government to help, but also understand there’s only so much they can do before they start making more damage than actually helping the economy. There WILL be more poor people because of the situations you describe.