Science Forums 2

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Originally Posted by InfiniteNow

The point being that this is yet another way that the social classes will become further divergent. Those who have expendible money will now be able to gobble up property like pac-man, and for minimal financial impact to their own wallets. There's a deeper issue at play here regarding intentionality of bad policy decisions for short term individual gains. Like driving down a corporations stock so you can buy a bunch of it before "fixing" the issue that drove it down. Then, after you've acquired a tremendous amount while it was cheap, the prices go back up, and you've done rather well for yourself. All while the lower classes keep struggling just to survive, let alone finally get ahead.

All obvious, and a good reason for people to put the cash together and take the same opportunity instead of all letting a few speculators beat them. The real trouble is just the way the real estate market tends to be. When you say "at 30-40% of their actual value" what is meant by their actual value? Don't just look in the estate agency's windows, without seeing how houses are actually selling. If you ask a million for a shack but no one buys it, is that the shack's actual value? There's a reason why the auctions are being concluded at low prices.

By what I've read about the subprime speculators, they don't even need to hold as you conjecture. They sell their acquisitions easily enough to people who've been looking through the real estate agencies and simply don't go to the auctions. Those who bought from the auctions give a slightly better deal and the profit is quick and easy. The less people there are at the auctions and the more of them that buy without going to them, the greater the discrepancy. Just an example of how infallibly market law makes price equal to value.