We've talked about the boom-bust nature of today's real estate market in another thread. This thread is intended to talk about how the sharp appreciation in home prices, like what has been happening in SA, can actually be detrimental to a large segment of the people living in those communities...
I have a friend who bought a house in California for $200K before the latest real-estate bubble, today his house is worth a cool $450K. So I ask him, why don't you sell the house and walk with your $250K in profit now before the market kicks back to a more realistic level? His answer is he has to live somewhere and if he sold his home, he would have to walk away from his career, his friends and associates, and likely California altogether because even a cool $250K wouldn't buy a shack next to a In-and_out burger in the state.In the past five years, housing prices in Fairfax County have grown 12 times as fast as household incomes. Today, the county's median family would have to spend 54 percent of its income to afford the county's median home; in 2000, the figure was 26 percent. The situation is so dire that Fairfax recently began offering housing subsidies to families earning $90,000 a year; soon, that figure may go as high as $110,000 a year.
Seventy years after President Franklin D. Roosevelt declared that the Depression had left one-third of the American people "ill-housed, ill-clothed and ill-nourished," Americans are well-clothed and increasingly overnourished. But the scarcity of affordable housing is a deepening national crisis, and not just for inner-city families on welfare. The problem has climbed the income ladder and moved to the suburbs, where service workers cram their families into overcrowded apartments, college graduates have to crash with their parents, and firefighters, police officers and teachers can't afford to live in the communities they serve.
Homeownership is near an all-time high, but the gap is growing between the Owns and the Own-Nots -- as well as the Owns and the Own-80-Miles-From-Works. One-third of Americans now spend at least
30 percent of their income on housing, the federal definition of an "unaffordable" burden, and half the working poor spend at least 50 percent of their income on rent, a "critical" burden. The real estate boom of the past decade has produced windfalls for Americans who owned before it began, but affordable housing is now a serious problem for more low- and moderate-income Americans than taxes, Social Security or gas prices.
Yet nobody in national politics is doing anything about it -- or even talking about it.
That's the nature of real estate appreciation, even though you think your richer because your home is worth much more, in order for you to keep your standard of living in whatever city your in, you won't ever actually realize the wealth in your home because all home prices have risen equally in the area making necessary housing expensive for everybody.
Many Californians sold at the peak, move to Las Vegas or Phoenix, bought a bigger, newer home for 50% of their previous home's selling price, put several $100K into investements.
If you can move to and like to live in the desert, it can be much cheaper than the coast.
A lot of observers say the 100s of 1000s of home owners will be soon raped by variable-rate and other risky mortages if/when the interest rate rises significantly.
Or, he could sell, rent for a while, and then buy again when the market cools.
Is it just me, or will urban sprawl eventually (soon?) collapse?
Precede the trend and buy low (ridiculously low, in some places).
[/half-baked thought]
I don't think it will suddenly "collapse." People gradually will make different choices about their living arrangements. For some people, that may be a smaller space closer to a city center in a high-density, more "walkable" area. For others, it may just mean ditching the Expedition in favor of a Fit.
australia is also facing a similar problem like the states........
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