tag:blogger.com,1999:blog-33399132.post3904613204576681467..comments2024-03-04T08:09:21.453-08:00Comments on Richard's Real Estate and Urban Economics Blog: Diane Swonk Waxes Poetically about Falling House PricesRichard Greenhttp://www.blogger.com/profile/02161226214739034402noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-33399132.post-12927348223317952822008-04-24T06:53:00.000-07:002008-04-24T06:53:00.000-07:00They store deferred consumption using homes becaus...They store deferred consumption using homes because interest rates are perceived to be negative in the long run. That is, put enough money in a bank account to buy a mid size car, and 10 years later you can no longer buy a mid size car with what is in the account. Prices went up faster than the nominal value of the account. Stocks are too volatile for many people's temperament.<BR/><BR/>Of course, "savings" in the form of home equity cannot be loaned out. Thus the need to fund business expansion and consumer purchases via foreign savings.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-33399132.post-29511671625796203892008-04-23T20:02:00.000-07:002008-04-23T20:02:00.000-07:00Which is why we should question a tax code and oth...Which is why we should question a tax code and other measures that encourage people to hold a portfolio that is undiversified in the extreme as frequently people's jobs and house prices may be positively correlated (think of company towns for an extreme case). Shiller's idea of house price insurance would help.Acad Roninhttps://www.blogger.com/profile/17859105860193065352noreply@blogger.com