I was sorting through mails and came across two shiny flyers.
The kind made in glossy card stock paper from No. 1 sellers agents in the
sought after area where we live – rather where we rent. Both flyers were
screaming loud that they sold most of the homes for much more than the listed
prices. Some prices were over 100 K or 150 K than the listed price. Some of
them say cannot disclose how much more. The factor that got my attention was
two words in green, in most of the transactions - ALL CASH.
So who can buy a home for 1.5 Million in all cash? And why?
How does this impact the economy? My simple knowledge about the US economy is that
the financial institutions need to generate loans and revenue though interest
to create a sustainable economy. Is that not true? What triggers the home
pricing hike? Did a simple search for “United States Economy”. The following is
a statement I found in one of the articles.
“A central feature of the U.S. economy is the economic
freedom afforded to the private sector by allowing the private sector to make
the majority of economic decisions in determining the direction and scale of
what the U.S. economy produces. This is enhanced by relatively low levels of
regulation and government involvement,
[as well as a
court system that generally protects
property
rights and enforces contracts.”
Economic freedom has
made a United States a highly sought after land for living from people all
around the world. With the abundance of natural resources and opportunities,
this country became home to millions of hardworking individuals who thought
they could realize the American Dream and live happily ever after. It is a pity
that at least three fourth of those who made this country home, cannot really
afford to own a home for themselves. Just thinking a little more on this
situation, what causes this? Is this governed by the law of supply and demand?
A recap of the law of
supply and demand: “The law of supply and demand defines the effect that
the availability of a particular product and the desire (or demand) for that
product has on price. Generally, if there is a low supply and a high demand,
the price will be high. In contrast, the greater the supply and the lower the
demand, the lower the price will be.”
Personally I think US housing in some parts is governed by Surplus Money + Controller
Demand + Opportunistic Greed, than the actual Supply and Demand in the market. Buyers
with a lot of money from stock options or whatever, and out of country buyer
who desperately wants to invest in the US are always willing to pay anything
more than the listed price for a house. The hard working families with normal
income pattern can only dream of a dream home forever.
Should there be some regulations in place? Should someone
look at this situations? Or is this a situation created for a reason?
