I've been reading Ben's blog for a while. Kind of addicted to it, in fact. This is our life. This is potentially our future. Will prices come down? They have to. One commenter a few months ago put it like this: if a house continues gaining equity at the current rate, what will it be worth in 40 years? Well, let's see. I just fooled around with the numbers, and it seems that our house has increased in value an average of 23% every year since 2001. An average, fairly nice but not great house in a decent area on the Westside of Los Angeles costs about a million dollars these days. If it keeps accreting value at 23% a year, it will be worth 2.6 billion dollars in 40 years. Yes, billon. Um, yeah. Right. Income levels? Not increasing at 23% a year. Inflation? Nope, that either.
This housing bubble has to end, and fairly soon, too. A million dollars for a 1500-2000 square foot house on a 6-7000 square foot plot of land in a fairly pleasant but not amazing neighborhood, that's already beyond absurd. Prices are cyclical. This history-making cycle is about to end.
We had to sell our current house to have the cushion we need for this move. We have to wait to buy a new house until we see what our life looks like in New Jersey/New York. If we can afford to stay there. What our income level will be. What part of our new town feels most like home. It's practical to wait for all kinds of personal reasons. But if it also means we end up buying in a saner housing market? That, due to pure serendipity, we timed this just right? That would be wild. So wild.
I guess someone has to benefit from the fickle winds of money and markets, why not us?Posted by Tamar at July 29, 2005 10:04 PM | TrackBack