Here’s an article from the NYTimes — front page of the Home and Garden section, no less — which discusses families (pretty darned affluent ones at that) having made lots of paper equity on their homes in the last few years, and no place to spend it when they outgrow or out-desire their current places. So maybe they make 100% profit on their investment, but find they still can’t afford an upgrade within their geographical areas.
I’ve been posting about the need to create more housing to soak up the high demand, but bubbles are immune to ordinary supply/demand patterns. The extra demand that creates the bubble is partly from speculation, which makes it tough on folks who actually want someplace to live for an extended period of time.
Really, one solution to the bubble is for other, less expensive places (Cleveland, Buffalo) to make themselves attractive somehow to people in the expensive areas, as with the couple in the article that moved to Montreal (a terrific place, by the way). Otherwise we may see the "Manhattanization" of entire markets like here and San Francisco, where folks pay higher and higher prices and hold lower and lower expectations because, well, they just have to live there. (After all, that’s me.)
As David Byrne once said, "This is not my beautiful house… My God, how did I get here?"
According to this article, Boston is the city most likely to have its bubble burst:http://www.kiplinger.com/personalfinance/magazine/archives/2005/08/realestate2.htmlAnd quite off-topic, did you watch Jon Stewart’s interview with Santorum?-Alex at Neil’s office, feeling like the clueless aunt who’s wandered out of her element
Yup, blogged that here.Haven’t seen Stewart and Santorum: is there a link?
Crooks and Liars, as always, has the video.AMERICAblog noted the softball interview. Then noted Stewart’s reaction the next night to the critisism.