mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Tuesday, January 18, 2005

Our house, in the middle of the street...

Yet another interesting article from instapundit - the Wall Street Journal looks at if there is a housing bubble, and if so, will it pop? David Bernstein at Volokh had a post a while ago on this that I meant to write about, but never did.

Mad Anthony is very concerned about the housing bubble (so concerned he's writing in the third person). I've been debating the whole house-buying thing myself - after about 2 years of renting and lots of overtime that's helped me save up towards a down payment, I'm thinking it may be time to take the plunge into home ownership. Two things are holding me back - I'm not sure if I want to stay in Maryland long-term once I get my MBA, and of course the general high price of housing.

Of course, the housing market is a catch-22. If I buy and it goes down, I'm screwed, but at the same time if I don't buy and housing prices continue to buy it will be harder to eventually buy, and I will have lost the increase in value gained by buying earlier.

I have mixed feelings on the likelyhood of the bubble popping. On one hand, prices here in Baltimore seem insanely high. At the same time, there is a limited amount of space convinient to the areas people work - ie the downtown - so as long as there isn't a massive downturn in the economy, people will have to work, and they have to live somewhere, and they probably want to live somewhere reasonably near where they work. Considering that even houses in PA along the 83 corridor are going for Baltimore prices despite being an hour away, I don't see Baltimore city/county prices dropping anytime soon. Supply and demand dictates that housing prices won't be coming down anytime soon. Instipundit comments that Tennasee housing prices haven't been very high, but that is probably related to the fact that there is a whole lot more land in Tenn. than in east coast cities like Baltimore, or the suburban areas of NJ where my parents live, where prices seem equally inflated.

The one thing that makes me wonder if things might drop is the amount of debt that people are taking on - the mortgage market has gone for 20% down to 10% down to interest-only loans. If these loans aren't sustainable - if people find they can't pay for them- there may be a lot of siezed property coming on the market in the next few years.


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