"After purchasing his Palm Springs home in 1997 for $240,000, Jim Franklin watched his home's value soar to about $900,000."
The writer here accepts the premise Franklin's home was actually worth $900,000 at some point.
And by accepting the premise the writer allows greedy or irrational homeowners, banks and mortgage brokers off the hook and perpetuates an argument that anyone was victimized by the market.
Franklin's home was only worth $900,000 if someone had paid him $900,000 to sell it. That's because the only true way to determine value of an asset is by witnessing what a willing buyer pays a willing seller to acquire the asset.
The story goes on to say that Franklin didn't buy into the home-value hype. He didn't borrow against his old mortgage based on a phony value and is now doing just fine.
My only point is that Franklin recognized what the writer didn't.
Ridiculous home values were a mirage.
The sooner we all recognize that fact the sooner we can work productively to repair the damage wrought by the home value myth.
And by accepting the premise the writer allows greedy or irrational homeowners, banks and mortgage brokers off the hook and perpetuates an argument that anyone was victimized by the market.
Franklin's home was only worth $900,000 if someone had paid him $900,000 to sell it. That's because the only true way to determine value of an asset is by witnessing what a willing buyer pays a willing seller to acquire the asset.
The story goes on to say that Franklin didn't buy into the home-value hype. He didn't borrow against his old mortgage based on a phony value and is now doing just fine.
My only point is that Franklin recognized what the writer didn't.
Ridiculous home values were a mirage.
The sooner we all recognize that fact the sooner we can work productively to repair the damage wrought by the home value myth.
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