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The Wall Street Journal reports that speculation on housing by house-flippers is down, and the writers seem to treat that as a bad sign for housing.
Small-time investors who flooded into real estate in the past decade to take advantage of low borrowing costs and rising home values are starting to cut back. The moves indicate that the market's short-term risk-takers see limited upside – and possible turbulence – ahead.
Thing - Bubbles - Bubbles - Risk - Recession
I believe that it is actually an excellent thing when speculative bubbles get gradually deflated. If the speculative bubbles deflate naturally and gradually, there is much less risk of a recession or worse. The more speculators who get into the market for anything, the worse it is for the public who would like to buy a house without chasing the market.
Whenever prices of anything go up faster than incomes, the risk increases of collapse. That is what caused the economic collapse in 2008. What is happening in San Francisco is terrible for the long-term economic health of the city.
Street - San - Francisco - Millionaires - Row
Nearly every street in San Francisco could be called "millionaires' row."
When you price the lower-, middle-, and upper-middle-income people out of the market, eventually, there will be huge problems, which will not be solved by government aid or a higher minimum wage. Every large city needs...
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