Asked by Chuck, 22314 • Mon Mar 3, 2008
I don't want to start a fight, but I am looking for your take on housing and economics.
Here are a few assumptions that I need to frame my argument around, (or else I will get a million "it depends" answers)
1. There is no increase in the value of a home. It doesn't appreciate, nor depreciate in value.
2. Lets not take taxes or inflation into consideration.
Here is my argument-- If I buy a house for 100K (to keep the math simple) and sell it (the length of time doesn't matter) a realator will charge me about 6k to sell it. Since my home didn't appreciate, (and I don't want to loose money) I need to sell my house for 106K. (I break even, the relator gets her commission).
The next person buys my place for 106, and decides to sell. He tries to sell his house for 112K (simple math). This cycle goes on and on. Of course 6% on a 500K is much more, and the price of the homes will increase that much faster. Does this argument hold any water or am I way off base?
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