Out at the peak

Friday, January 13, 2006

Huge flaw in Housing Heads' minds

Housing Heads continue to argue that, "Many families will not live serenely in an apartment waiting for a bubble burst. Families need houses." This leads to a conclusion that housing prices will always go up.

The fundamental flaw in that assumption is that they forget families can rent a house (with a yard and everything). There are more speculators than ever so there are even more houses to rent than before. Rent is going for a fraction of the actual mortgage+tax.

My original house purchased in mid 2000 had expenses of $1939/mo. In 2005, the buyers have $4001/mo expense. Now in 2006, I am renting a house that overall is almost as good as my old house, but I'm only paying $1300. Even after tax deductions, I'm saving $222/mo. This makes sense because even in 2000, house prices were already at a high index.


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