Rising prices allows home sellers to cash out and extinguish debts

Many people sell when prices rise high enough for them to retire, move up, or extinguish their debts.


Many people imagine the property ladder as a progression from a condo near work, to a house in the suburbs, to a mansion by the beach. Many people buy entry-level housing, and when prices rise high enough for them to pocket a 20% down for a larger property, they participate in the move-up market. If their income grew while they lived in their entry-level home, the step up can be quite luxurious. If their income didn’t go up much, they are probably better off refinancing into a lower-cost mortgage and staying where they are.

The housing bubble severely disrupted the housing market. The mania prompted many people to buy into a market frenzy and many others to refinance their homes at peak price levels.

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