Tuesday, January 18, 2005
Housing Bubble
Regular readers will recall that I speculate periodically about whether there is a housing bubble, be it regionally or generally. Via Glenn, the WSJ has an article today that discusses the possibility, which remains unclear but increasingly likely.
What I look at is the fact that the rent I pay is not unusual, but I can barely afford it. Extrapolate from that to a mortgage likely being around double what the rent is, and you’ve got trouble. Put another way, I wonder at the sustainability of an up and up and up and up housing market in light of what real people earn and can afford, in places where incomes aren’t wildly inflated to match, or become unsynchronized.
If we’re lucky, the bubble, if it is one, will have burst, be it a hard or soft landing, by the time we can be in the market. Or I’ll have written a wildly popular book or two and have money from that. Hey, it could happen.
At least we shouldn’t have to worry about not getting the benefit of tax deductions because we don’t itemize. With how much a mortgage will be when the time comes, I will have to make enough, and the interest and taxes will be so insane, that itemizing will be a no brainer.