Inflation-adjusted home prices in China have fallen below where they started two decades ago, and the fiscal fallout is hitting local governments even harder than developers.
many will be tied to their house because it’s impossible to sell at a price that will clear the debt, so they can’t afford to move
if housing prices fall, you get less money if you sell your old house but it also requires less money to buy your new house so it cancels out and you can move just as easily or difficultly as you could when prices were high.
No it does not cancel out, because when you lose money on your old house, you are left with that debt.
And having that debt makes it impossible to take a loan for a new house.
I’ve seen this work out in practice up to 10 years after the housing bubble burst in 2008. Where we visited many foreclosures people couldn’t afford to keep, and couldn’t afford to move away from. It’s a very bad debt trap that I think maybe USA has regulation to get out of, but IDK if other countries have that, we for sure don’t have it here.
if housing prices fall, you get less money if you sell your old house but it also requires less money to buy your new house so it cancels out and you can move just as easily or difficultly as you could when prices were high.
No it does not cancel out, because when you lose money on your old house, you are left with that debt.
And having that debt makes it impossible to take a loan for a new house.
I’ve seen this work out in practice up to 10 years after the housing bubble burst in 2008. Where we visited many foreclosures people couldn’t afford to keep, and couldn’t afford to move away from. It’s a very bad debt trap that I think maybe USA has regulation to get out of, but IDK if other countries have that, we for sure don’t have it here.