We’ve inflated another bubble; count on the crash. People complain about high prices when they’re buying, not when they’re selling, and that’s why housing bubbles are always politically popular: The sort of people who own homes are the sort of people who vote and volunteer on political campaigns and make donations. And the fact that tax revenue tends to increase as housing prices rise doesn’t go unnoticed by the nation’s mayors and governors. Renters tend to have more sensible views — you’ll never hear a renter say, “Hey, my rent is doubling this year — that’s awesome! The economy must be doing great!” But nobody listens to them.
And that’s why we’ve inflated a second housing bubble.
In some ways, the current housing bubble is even more bonkers than the last one — which, if you’ll recall, sorta-kinda almost destroyed the world’s financial system.
As of this writing, the median U.S. home price is just 3 percent shy of its 2007 peak. (Existing-home prices already are at a record high.) But that does not even begin to capture the story. In San Francisco, the median price of a single-family home has doubled since 2012. The median San Francisco home is now nearly $1.4 million, or 50 percent higher than it was at the peak of the last bubble. The median household income in San Francisco is about $77,000. Put another way: The median home price in San Francisco is now 18 times the median household income.
Does that sound like a stable position to you?
Via: National Review
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