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  • From: Toby Hemenway <toby@patternliteracy.com>
  • To: permaculture <permaculture@lists.ibiblio.org>
  • Subject: Re: [permaculture] The US is no longer food self-reliant?
  • Date: Fri, 17 Aug 2012 08:05:51 -0700

On Aug 16, 2012, at 11:45 AM, Frances and David wrote:

> Food for thought here. Thank you.
> What I am wondering is how might real estate be affected.

The downside outweighs the upside. Mortgage interest is at historic lows, and
when (not if) rates go up, monthly payments will increase, and that will make
houses unaffordable at current prices, so prices will come down. Also, the
economy is so burdened with debt now that credit will probably continue to be
hard to get (to bring down debt levels) so mortgages will continue to be hard
to get. And incomes are static to declining. All this puts downward pressure
on house prices. I see no reason for upside except another bubble.

In general, things that take debt to own will drop in price. Things that take
resources to make will go up in price. That's a terrible squeeze.

I think that buying a house as an investment is no longer a good idea. It is
a place to live. That makes it a wise place to put earnings that you don't
need to get back as cash, to reduce living expenses--your house and land will
survive a currency crash. But we sold our house in 2010 and are currently
renting (and I own, with the bank, a rental house that is paying for itself).
Rents right now are lower than mortgages and change far more slowly. Unless
you badly need that mortgage deduction (which means you are earning more
money than you need!), I can't see buying a house now. So if I were
considering selling, I'd do it soon and not buy again unless I got a great
bargain, or didn't care if the price dropped because it's real value is a
place to live. I suppose you could try a low down payment and be prepared to
walk if you have to default, but that's gaming the system and doesn't create
security.

I know someone who sold his house in 2004 and bought gold with the cash (up
6x), and rented a small place. They are quite rich now, in gold.

Rural house prices have not rebounded as much as metro prices. I think that
will continue, as long commutes become less doable.

I think cities, especially those of 25,000-500,000 people, will be good
places to be unless we have a total chaotic collapse. Resources stay in and
move to populated areas generally; rural areas will be triaged first for
power, maintenance, and shipping during scarcity because people and political
power are in urban areas--its a law of physics (density means short
connections). You can grow food in the country; you can't do much else
compared to all that is available in a city. And you can grow food in cities
and towns.

Toby
http://patternliteracy.com

> I have some very mixed feelings as someone interested in moving out of a
> lovely town residence and into a country homesteading scenario.
> Wondering how big a risk to sell one's home at this time.
> Of course, it's all just anybody's guess, but I have not seen anything much
> on this topic at all.
> Anyone?
> Thanks again for this interesting post, Toby.
> Best,
> Frances
>





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