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HOT TOPIC Dave Ramsey being asked how to get rich

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FauxPas

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That advice will cost you more, he won't give that out for free ;)
Lmao yeah he recommends reading his books that teach financial common sense, not real wealth building. "It'll answer those kinds of questions you have". Ok sure Dave yeah apparently someone can claim themselves to be a millionaire if on paper they're worth millions but don't make that in income. What a shame. Yet he makes a lot of money selling this advice because most people are financially illiterate.
 

MrTrash757

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Lmao yeah he recommends reading his books that teach financial common sense, not real wealth building. "It'll answer those kinds of questions you have". Ok sure Dave yeah apparently someone can claim themselves to be a millionaire if on paper they're worth millions but don't make that in income. What a shame. Yet he makes a lot of money selling this advice because most people are financially illiterate.
This is correct. He also made alot in real estate and lost it too from what I remember.
 

FauxPas

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This is correct. He also made alot in real estate and lost it too from what I remember.
I think that's where his don't use debt mentality came from. He used too much leverage on properties, resulting in him becoming bankrupt. I disagree with his stance on debt. Debt is good if it creates wealth and pays for itself with time. It's bad if used for consumption. But I find it very ironic that he makes using debt for a house an exception. So it's ok to use debt for an asset that's practically being used for consumption yet everything else is bad? All because "It's your biggest asset". Since when did someone's personal residence ever made someone a millionaire / billionaire? It wouldn't make any sense to call it your biggest asset when the 1%'s biggest asset is their business.
 

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How he continues to believe that all debt is irredeemable is beyond me.

I know so so so many multimillionaires that couldn't have done a half as well as they have without debt. I use it to carry large purchase orders routinely. I don't want to be limited in how much I can carry for a customer. That is what allows me to play with big a$$ customers.

With no debt, I would have started out selling a 50-100k at a time. With debt, I can sell this stuff by the traincar as often as the customer request.

Years ago, we also sold industrial capacitors for power factor leveling to companies running big electric motors. They would save them money in about 2-3 years... They would last about 20... Slam dunk right? Nope, not one customer until I found a bank to underwrite these capicators. Spread out over a 15 year payment plan they saved money in the first month and also improved the lifespan of their equipment. I only ever sold those with a payment plan. Never for cash.

Debt is awesome as far as I'm concerned. Especially with interest rates as low as they are and the dollar on the way down. Just use it wisely and don't personally consume anything you can't easily afford.

I'm shocked he hasn't admitted the gaping holes in the "zero debt ever" thing. Every big company in the world has payables on their books.
 
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Black_Dragon43

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Clearly not what made him rich in the first place.
How would you have answered the question? Dave Ramsey is partially right. Real wealth takes time to build, there's no ifs or buts there - whether you go fastlane or slowlane.

You should watch these 2 videos:
View: https://www.youtube.com/watch?v=0MeRN7LE1LQ&ab_channel=EconomicsExplained


View: https://www.youtube.com/watch?v=uXZPywdfEi4&ab_channel=LogicallyAnswered


As you can see, Bill Gates (or Warren Buffett) are actually richer than Jeff Bezos or Elon Musk, even though on paper it doesn't look like it. And then old-money from aristocratic families are even richer than Bill & Warren.
 

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How he continues to believe that all debt is irredeemable is beyond me.

I know so so so many multimillionaires that couldn't have done a half as well as they have without debt. I use it to carry large purchase orders routinely. I don't want to be limited in how much I can carry for a customer. That is what allows me to play with big a$$ customers.

With no debt, I would have started out selling a 50-100k at a time. With debt, I can sell this stuff by the traincar as often as the customer request.

Years ago, we also sold industrial capacitors for power factor leveling to companies running big electric motors. They would save them money in about 2-3 years... They would last about 20... Slam dunk right? Nope, not one customer until I found a bank to underwrite these capicators. Spread out over a 15 year payment plan they saved money in the first month and also improved the lifespan of their equipment. I only ever sold those with a payment plan. Never for cash.

Debt is awesome as far as I'm concerned. Especially with interest rates as low as they are and the dollar on the way down. Just use it wisely and don't personally consume anything you can't easily afford.

I'm shocked he hasn't admitted the gaping holes in the "zero debt ever" thing. Every big company in the world has payables on their books.

There is such a huge gap between Dave Ramsey giving "personal" finance advice and someone who is highly motivated doing "business".

Personal vs. business. Massively different, but really all it is is a mindset change, plus maybe a couple legal documents.

Without debt, good luck growing any kind of meaningful business in America.
 

FauxPas

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How would you have answered the question? Dave Ramsey is partially right. Real wealth takes time to build, there's no ifs or buts there - whether you go fastlane or slowlane.

You should watch these 2 videos:
View: https://www.youtube.com/watch?v=0MeRN7LE1LQ&ab_channel=EconomicsExplained


View: https://www.youtube.com/watch?v=uXZPywdfEi4&ab_channel=LogicallyAnswered


As you can see, Bill Gates (or Warren Buffett) are actually richer than Jeff Bezos or Elon Musk, even though on paper it doesn't look like it. And then old-money from aristocratic families are even richer than Bill & Warren.
I would've said that: there are many different ways of building wealth, but at its core it all comes down to providing value at scale / magnitude that the market would want. Which is not very easy and often involves a lot of hard work, sacrifice, and patience. Which is often a painful process. The better you do that the richer you become. The more effectively you deliver value to the world the more quickly wealth is built. Conceptually simple but executionaly very difficult.

Something like that would've been way more helpful than just saying it's more complicated than what it really is.

Also that's pretty interesting (The videos).
 
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Jon L

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For most people, Dave Ramsey is correct ... get out of debt, stay out of debt (what he means is: don't spend more than you make), and save.

Most people wouldn't make it in business. Most people won't make high incomes. For those people, Dave Ramsey's advice is exactly what they need.
 

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I think what is missing here, and a few people have touched on it already in this thread, is:

We aren't Dave's audience.

Dave's audience is the average consumer/person. Not the business owner. Not millionaires, etc.

Sure, sometimes a business owner will call in about their massive debt, but the business owner calling is typically talking about their PERSONAL debt, not their business debt.

  • Dave found his audience.
  • Dave found the messaging that works for his audience.
  • Dave caters to his audience.
  • Dave's advice for 90% of his audience, is exactly what they need.
  • Most of Dave's audience is looking to reduce debt, not generate cash flow or build wealth.

So not sure why the hate.

Remember, we aren't his audience typically. Therefor his message doesn't connect with us on topics we care about.

.
 

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I think Dave's teachings are good to have a decent foundation on, but as everyone has stated, it's difficult to scale your wealth afterwards.

It also depends on the kind of debt you have as well. I see it as a tool. If the debt doesn't lead to something greater, just kill it off.
 

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The main issue I have with people like Dave and anyone who gives out financial advice, is how they always focus on what will work "for most people."
When someone says "how do I get rich," they aren't asking you "how can I be like most people?"
They are asking how to be different!!
That's why MJ's books are so good. That's why they're different.

99% (47.36% of all statistics are made up) of financial and career advice out there is bullshit for this reason.

People want to know how the world works, or they wouldn't be asking. It is doing the world a disservice to provide an answer that does not even begin to approach the intent of the question.

One of the worst ones is when someone asks "how can I become a millionaire" and the answers are basically like, "it's really hard unless you do it this way" (40 years of index investing) basically implying there is no reason to do anything hard.

Lol. Fail.
 

WJK

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Here in this video we see an average Joe asking Dave Ramsey how to get rich and his response:
View: https://youtu.be/8gu7ZsOH3x0


Clearly not what made him rich in the first place.
Like Dave Ramsey, I see acquiring debt as very dangerous. It's easy to get into and very painful to get out of. Yes, it takes a lot of capital to build a business or buy real estate. But, it becomes a quick-sand quagmire that takes on a life of its own. You need money to grow your business -- then the business is financially stressed when the payments come due. So, you must borrow more -- in order to do more business -- which heaps on an additional burden of payments.
 

Envious

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I don't see the point of this thread to be honest
 

WJK

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I don't see the point of this thread to be honest
That is precisely the point. The first step in knowledge and expertise is that you do not know, that you don't know. There are many points of view. You may want to consider and ponder the various differences as you learn and grow.
 

FauxPas

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Like Dave Ramsey, I see acquiring debt as very dangerous. It's easy to get into and very painful to get out of. Yes, it takes a lot of capital to build a business or buy real estate. But, it becomes a quick-sand quagmire that takes on a life of its own. You need money to grow your business -- then the business is financially stressed when the payments come due. So, you must borrow more -- in order to do more business -- which heaps on an additional burden of payments.
I don't understand why you're saying that when I've established before that debt only becomes bad when you use too much leverage and use it to consume wealth and not produce it. Look at Grapham Stephan for example. He got rich using debt to buy properties to rent. He has his debts properly managed and not over leveraged. Although his debt is long term he has the income to continue their payments should his tenants default. He made a video on this:
View: https://youtu.be/FbuiPcgLyt4
 

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How he continues to believe that all debt is irredeemable is beyond me.

I know so so so many multimillionaires that couldn't have done a half as well as they have without debt. I use it to carry large purchase orders routinely. I don't want to be limited in how much I can carry for a customer. That is what allows me to play with big a$$ customers.

With no debt, I would have started out selling a 50-100k at a time. With debt, I can sell this stuff by the traincar as often as the customer request.

Years ago, we also sold industrial capacitors for power factor leveling to companies running big electric motors. They would save them money in about 2-3 years... They would last about 20... Slam dunk right? Nope, not one customer until I found a bank to underwrite these capicators. Spread out over a 15 year payment plan they saved money in the first month and also improved the lifespan of their equipment. I only ever sold those with a payment plan. Never for cash.

Debt is awesome as far as I'm concerned. Especially with interest rates as low as they are and the dollar on the way down. Just use it wisely and don't personally consume anything you can't easily afford.

I'm shocked he hasn't admitted the gaping holes in the "zero debt ever" thing. Every big company in the world has payables on their books.

Are there any valuable informations about business-related debts and the strategic handling with, you would recommend?
 

FauxPas

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That is precisely the point. The first step in knowledge and expertise is that you do not know, that you don't know. There are many points of view. You may want to consider and ponder the various differences as you learn and grow.
That's not true. We have the ability to access what we don't know. Because how else would you educate yourself if you don't first learn what you don't know about? Otherwise you would be too stupid to learn anything. So by definition it starts with recognising that you don't know something. Presuming that you know something when the evidence says otherwise is different however. It's much better to say "Never presume your knowledge is always adequate without evidence" than saying you "can't know what you don't know". People always have the ability to recognise their ignorance, they just aren't always able to separate their beliefs from their judgment to see reality clearly.
 

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Are there any valuable informations about business-related debts and the strategic handling with, you would recommend?
I will do a podcast show on debt today or tomorrow.

Unfortunately, there is no resource I know of that taught me to use it wisely. I just set my boundaries for myself.

Edit... Here it is:
 
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WJK

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I don't understand why you're saying that when I've established before that debt only becomes bad when you use too much leverage and use it to consume wealth and not produce it. Look at Grapham Stephan for example. He got rich using debt to buy properties to rent. He has his debts properly managed and not over leveraged. Although his debt is long term he has the income to continue their payments should his tenants default. He made a video on this:
View: https://youtu.be/FbuiPcgLyt4
Yes, I have also used financing in my RE business. It's a management plan that is a dance on the point of a needle. It's very easy to fall off of the point of balance and crash. It's taken me 35 years to break that cycle. I have learned that more and bigger are necessarily better.
I started to tell you about the 1990s, industry-wide, RE melt-down over OPM (other people's money), but I'm not sure that you can hear me right now. I was reading last night about the shopping mall melt-down that is happening right now. And this time it's starting on Wall Street in the commercial financing bond market. Will it stop with that market segment? Last time the melt-down took down the whole Savings & Loan/Thrift industry.
 

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Yeah, I don't trust ramseys advice as much. It works for him now that he has money...but the advice he gives didn't make him rich.
 

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I live in the same town and same zip code as Dave. I go to the same church as Dave. My friends live in his luxury gated neighborhood. I've consumed almost all of his materials. I'm not a raving fan, but I'm also not a hater. I am in the middle on Dave. If anyone wants to have an AMA about Dave then I would gladly start one since I don't think anybody from his posse will see it here.

Like, how does he make his money? What does he do for revenue? How did he get started? How did he go bankrupt? I will answer them if anyone cares.
 

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WJK

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I live in the same town and same zip code as Dave. I go to the same church as Dave. My friends live in his luxury gated neighborhood. I've consumed almost all of his materials. I'm not a raving fan, but I'm also not a hater. I am in the middle on Dave. If anyone wants to have an AMA about Dave then I would gladly start one since I don't think anybody from his posse will see it here.

Like, how does he make his money? What does he do for revenue? How did he get started? How did he go bankrupt? I will answer them if anyone cares.
I didn't work his specific program, but I did like his message. And I agree. Being debt-free is empowering and a very strong position. I'm RE. I was part of a local landlord's association (before the virus made us stop meeting) and they totally disagreed. They were into leverage, OPM (other people's money), and RRRR. I've been in the business a lot longer than any of the other members, so I have experience with different market conditions. I've tried a few times to tell them about that history. They wouldn't listen to me. They told me I was stupid -- I just didn't know anything. So, I shrugged my shoulders, shut up, and continued to prepare for the next RE crash. I hope they make it through these next few months and years. A repeat of the 1990s would be very painful.
 

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I didn't work his specific program, but I did like his message. And I agree. Being debt-free is empowering and a very strong position. I'm RE. I was part of a local landlord's association (before the virus made us stop meeting) and they totally disagreed. They were into leverage, OPM (other people's money), and RRRR. I've been in the business a lot longer than any of the other members, so I have experience with different market conditions. I've tried a few times to tell them about that history. They wouldn't listen to me. They told me I was stupid -- I just didn't know anything. So, I shrugged my shoulders, shut up, and continued to prepare for the next RE crash. I hope they make it through these next few months and years. A repeat of the 1990s would be very painful.
There are a lot of people investing into multiple real estates these days.

The narrative is simple. Low downpayment and hence high leverage, with good rental yield. The rent is enough to cover the mortgage payment and as time pass you will own the property while someone else pays it for you.

What do you think are the pitfalls of such investment thesis in today’s environment?
 

WJK

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There are a lot of people investing into multiple real estates these days.

The narrative is simple. Low downpayment and hence high leverage, with good rental yield. The rent is enough to cover the mortgage payment and as time pass you will own the property while someone else pays it for you.

What do you think are the pitfalls of such investment thesis in today’s environment?
This is my 5th business cycle so I have a different point of view on the RE market. I already posted most of this once. But, I put this out again...

A history lesson

To set the stage -- In 1990 I was putting my life back together after my husband had recently discarded me -- he was an executive-level consultant for an oil company, and I had been his trophy wife for a number of years. Professionally, I'd was a broker, investor, and a commercial RE appraiser -- way before appraisers were licensed. So, I saw the RE crash from the corporate perspective as well as from my RE career.

The first cracks in the commercial RE market came from my ex's company. They had been occupying all 48 floors in one of their twin towers. Their "test" convenience store and other shopping facilities were under the building. They sold those high-rise office buildings to a Japanese investment company in what seemed to be an overnight move. They bought land on the "wrong" side of the freeway and built a new building. This didn't make business sense to me. They had gone from a prime location to a much less desirable area of the city. I knew the players in that company and I was floored. Then, when they moved in, they only occupied 2 floors versus their previous 48 floors, plus retail space. How did they do that? They fired the whole army of secretaries, receptionists, and admin assistants. All remaining employees were given laptop computers (a new invention at the time) and a voice mail account. They were told to make an appointment for office space-time. The party was over.

And that was just the beginning. This trend cascaded throughout the office markets. It hit the A market first, and then the B & C markets. We had droves of "see-through" buildings -- high rises with no tenants. No office building tenants meant no one to shop in the retail stores and live in the downtown condos & flats. Downtown was a ghost town. (Are you listening to this, New York City?)

In the meantime, the Japanese stock market crashed. Those investors had taken out full-page ads to brag about their penetration into the Los Angeles RE market. They dumped their properties for whatever they could get in order to meet their stock margin calls at home.

And then it hit the warehouse RE market. Normal was to have 60 days of goods on hand for distribution. With computerization and new transportation systems (Fed Ex, UPS, etc), they now had on-time deliveries -- 2 to 5 days of goods on hand. The warehouse districts emptied out.

The 1980s had been a go-go time for RE -- lots of inflation. Everyone was living on OPM (other people's money) and most RE investors were highly leveraged. The early 1990s was the wall that they hit head-on. Friends lost everything. They ended up in bankruptcy court with their hats in the hands.

This time it didn't recover quickly. We had all that excess RE inventory to absorb. We, in the RE business, had a mantra. "Stay alive 'til 95." 1995 came and went. Nothing changed. We were still in the toilet in the business. No one could believe how low the prices went during those days.

And, I was hired by RTC, on some of their audit teams, to go in and take over the Savings & Loan and Thrifts that were holding all that bad paper. They fell like flies. The entire industry failed. Wall Street and the secondary housing market took over financing RE.

The recovery took the entire decade. I got a wild hair and I went to law school at night and on the weekends during the first half of that period of time. And I began my expert witness work and litigation support business in RE, using my degree. It was a horrible time for all of us in the RE business. I only survived because I was a fighter who was willing to meet the changes head-on.

So, that brings us to now. The commercial RE market is falling apart before our eyes. It's not just one sector -- it's everything. The housing market is in a bubble. People are moving, now that they have proved that they can work remotely. New York and other cities are ghost towns. RE prices and rents are falling. The rioters have burned down huge areas of many of our cities. Will they be rebuilt? And how? With whose money? What land uses will they have in those areas when they are done? Residential rentals are head-to-head with homeownership under the last tax relief bill due to the standard deduction. That creates a whole new market of single-family rentals. How will that affect appreciation in the housing market? And this time Wall Street and the bond markets are on the hook.

You see, I have more questions than answers.
 

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This is my 5th business cycle so I have a different point of view on the RE market. I already posted most of this once. But, I put this out again...

A history lesson

To set the stage -- In 1990 I was putting my life back together after my husband had recently discarded me -- he was an executive-level consultant for an oil company, and I had been his trophy wife for a number of years. Professionally, I'd was a broker, investor, and a commercial RE appraiser -- way before appraisers were licensed. So, I saw the RE crash from the corporate perspective as well as from my RE career.

The first cracks in the commercial RE market came from my ex's company. They had been occupying all 48 floors in one of their twin towers. Their "test" convenience store and other shopping facilities were under the building. They sold those high-rise office buildings to a Japanese investment company in what seemed to be an overnight move. They bought land on the "wrong" side of the freeway and built a new building. This didn't make business sense to me. They had gone from a prime location to a much less desirable area of the city. I knew the players in that company and I was floored. Then, when they moved in, they only occupied 2 floors versus their previous 48 floors, plus retail space. How did they do that? They fired the whole army of secretaries, receptionists, and admin assistants. All remaining employees were given laptop computers (a new invention at the time) and a voice mail account. They were told to make an appointment for office space-time. The party was over.

And that was just the beginning. This trend cascaded throughout the office markets. It hit the A market first, and then the B & C markets. We had droves of "see-through" buildings -- high rises with no tenants. No office building tenants meant no one to shop in the retail stores and live in the downtown condos & flats. Downtown was a ghost town. (Are you listening to this, New York City?)

In the meantime, the Japanese stock market crashed. Those investors had taken out full-page ads to brag about their penetration into the Los Angeles RE market. They dumped their properties for whatever they could get in order to meet their stock margin calls at home.

And then it hit the warehouse RE market. Normal was to have 60 days of goods on hand for distribution. With computerization and new transportation systems (Fed Ex, UPS, etc), they now had on-time deliveries -- 2 to 5 days of goods on hand. The warehouse districts emptied out.

The 1980s had been a go-go time for RE -- lots of inflation. Everyone was living on OPM (other people's money) and most RE investors were highly leveraged. The early 1990s was the wall that they hit head-on. Friends lost everything. They ended up in bankruptcy court with their hats in the hands.

This time it didn't recover quickly. We had all that excess RE inventory to absorb. We, in the RE business, had a mantra. "Stay alive 'til 95." 1995 came and went. Nothing changed. We were still in the toilet in the business. No one could believe how low the prices went during those days.

And, I was hired by RTC, on some of their audit teams, to go in and take over the Savings & Loan and Thrifts that were holding all that bad paper. They fell like flies. The entire industry failed. Wall Street and the secondary housing market took over financing RE.

The recovery took the entire decade. I got a wild hair and I went to law school at night and on the weekends during the first half of that period of time. And I began my expert witness work and litigation support business in RE, using my degree. It was a horrible time for all of us in the RE business. I only survived because I was a fighter who was willing to meet the changes head-on.

So, that brings us to now. The commercial RE market is falling apart before our eyes. It's not just one sector -- it's everything. The housing market is in a bubble. People are moving, now that they have proved that they can work remotely. New York and other cities are ghost towns. RE prices and rents are falling. The rioters have burned down huge areas of many of our cities. Will they be rebuilt? And how? With whose money? What land uses will they have in those areas when they are done? Residential rentals are head-to-head with homeownership under the last tax relief bill due to the standard deduction. That creates a whole new market of single-family rentals. How will that affect appreciation in the housing market? And this time Wall Street and the bond markets are on the hook.

You see, I have more questions than answers.
house prices only go up!
 

WJK

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house prices only go up!
No, they don't.

I am a retired RE appraiser, both residential and commercial, who did fieldwork, reviews, and consultation. I have seen the prices go up and I have seen them go down. Most recently the prices of houses went down in many areas around 2008. It's totally market-driven. How many homes are on the market? How many qualified buyers are out there to buy them?

Then there are other market factors such as interest rates. When I started selling RE in 1976, the interest rate for homes was 9.5%. Around 1980, it was 21% to 22%. Now they are at historic lows. What if they double in the next few months?

Rents and the prices of housing are already falling in New York City due to people moving away. What about areas of California that are losing population? What about the rust belt?

What effects do taxes and regulations have different housing markets?

Think about what you saying. You are assuming a myth.
 

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