Tuesday, September 30, 2008

Housing: Taking a bubble bath to reality

As we digest the non-bailout and related issues, Demographia is once more assessing housing affordability and how current problems may make housing more affordable again.
The unfortunate reality is that housing bubbles are extremely appealing to most people – as inflating bubbles are the closest most will come to “wealth creation” – even if it is an illusion – and an extraordinarily dangerous illusion at that. This is explained within “Getting performance urban planning in place” and within my Op Ed on “Planetizen”.
In essence – by playing this game - these “bubble bunnies” become “mortgage slaves” on the self inflicted road to poverty.
Politicians are attracted to inflating housing bubbles as well – for their capacity to generate short term "bubble revenue" and allow spending to get out of control. The State Government of California is currently grappling with the downside of this – as are increasing numbers of other Governments globally.

Talking of California, I see prices have dropped 41% there.

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