Wednesday, June 28, 2006
My Home: The Dumb Perspective On "The Housing Bubble"
Sure feels like I'm still in a sellers market. Just saw a house, looked pretty good...6 days on market, and it's sold. I've written about it in the past...the freaky, scary, world economy ending housing bubble, but let's take another simple, logical view at the housing prices because I just don't understand what's going on. With all this press about housing prices going up, yet the bubble bursting, what's a prospective house buyer or seller to think! Definitely not "buy now!" Right? Let me give you the dumb perspective. Here are the facts, at least relative to my location... - Median housing prices are generally going up. - Average days on market is increasing. - Interest rates are going up. - More "non-traditional" loans are being taken out. There's something there that just doesn't make sense... If interest rates are going up, then less people can afford loans, means less people buying. Thus more homes available, thus increase in the average days on the market..link to CNNMoney.com that lists the Honolulu, HI as one of the best places to live in 2005. In it, you'll see "Median household income (per year)" = $50,974. You'll also notice "Median home price" = $280,771. Their data must have been from around 2003. That's the only time median household prices were around $280k based on data from the Honolulu Board of REALTORS. Well in 2005, that sites reports median home prices of $590k! Now if we take dumb math, and consider, if the median household income in 2003 = $51k (I'll throw in an extra $26) and median household prices in 2003 = $280k, then in 2005 the median house hold income should have increased to $107k. Uhhh, I don't think so. So, how are people affording these homes? Credit and more credit. That's the only explanation. Folks, we are just setting ourselves up for a major economic slap to the forehead. The sky is falling, the sky if falling! But then who listens to chickens? Am I just being dumb? Or maybe the housing bubble paranoia is the real bubble. Please tell me...I want to buy a house already...I hope I don't lose a few readers because of the advertisment in this post...I love irony.