It's the English speaking world's favorite economic game: property. No other facet of financial life has such a hold on the popular imagination. No other asset-allocation decision has inspired so many dinner-party conversations. The real estate market is unique. Every adult, no matter how economically illiterate, has a view on its future prospects.
The global credit crunch that began with a hiccup in the U.S. subprime markets in February 2007 snowballed into the greatest economic contraction since the Great Depression. The financial engineering that expanded the ability to afford homes in the United States in the middle of the 2000s became the underpinnings of the boom and bust of residential real estate that helped spur the world economy into a series of financial and political reactions that are still being felt today.
“Safe as Houses”
In his book The Ascent of Money: A Financial History of the World, Niall Fergusson explains what property ownership can mean to individuals as well as the world of finance. For very good reasons, investing in housing seems like a safe bet:
“Safe as Houses”: the phrase tells you all you need to know about why people all over the world yearn to own their own homes. But that phrase means something more precise in the world of finance. It means that there is nothing safer than lending money to people with property. Why? Because if they ...