down, so did the real-estate values. Ann Arbor, on the other hand, is a more diversified community. Certainly, in areas not dominated by one industry we don't have to worry about real estate ever declining."
"You're wrong. Real estate can go down. In most areas, real estate has been on a steady climb since the Depression, but no trend lasts forever. Need I mention California?" Roy cautioned.
"Roy, I respect your opinion, and I realize you know a tremendous amount about financial matters, but nobody I read thinks real estate is going to go down permanently," Cathy argued. "They're not making any more land."
"The famous finite-land argument," Roy laughed. "Yes, there is a finite amount of land, albeit that it works out to scores of acres per capita in the U.S.
"Look, I'm not saying real estate is definitely going to go down. But I do want to alert you to that possibility.
"Over the last several years, a few factors have combined to cause the prices of houses in many areas to skyrocket. Women have entered the workforce in un-precedented numbers. Americans are having fewer children than they did generations ago. Both of these developments result in higher disposable family incomes. Much of that higher disposable income is being spent on housing. In addition, the baby-boom generation has matured and has fueled an increase in the demand for housing. And, on top of all that, people are no longer averse to borrowing heavily. In fact, over the past fifty years borrowing has gone from a shameful vice to the national pastime. Instant gratification is our society's modus operandi. The consumer-debt rate is alarming."
"Roy, you should be writing doom and gloom books,