why are we in a recession, page-85

Warnie, thats why I am looking at something, particularily a development site that at the moment is unsellable because builders cant find finance. Buy it and sit on it for 2 or so years, in time for the next move up.

The renters at the moment are misisng how prices will increase ie another boom.

I dont call it a boom and this is why.

If prices do fall say 20% or even 30% ie go from 400K to $280K and lets assume that $400k was a realistic price and not overstated at the time.

If we assume 5% wags growth ovewr the two years and no inflation and interest is back to the 7-8% it was ie cost of a average mortgage of 300K will now at 8% be some $24,000

So once confidence comes back as the economy recovers, property will go back to at least $400k, rather than $440k ie 2 years 5% growth on the $400k. If you bought at $280 and sold 2 years latter, the gain is some 43%. but say it goes up to only $360k, the gain is 28%.

to some you can call a boom to me it is a correction of price. the gain on a developemnt site being more risk would be multiplied.

Please argue my assumptions.