Friday, December 14, 2007
Why The Housing Market Is Due To Crash
This graphic (h/t Calculated Risk) pretty much draws the picture for you. It no longer makes sense to buy when you can rent for far less than the monthly cost of ownership. We left the realm of sanity about 6 years ago.
Case in point: The apartment (a condo conversion of a brownstone; walk-up, floor-through) next door to me would rent for perhaps $2500-2700 dollars per month.
It sold for nearly $1,000,000. And has monthly maintenance and taxes. Does that make financial sense to you? Crunch the numbers any way you want, it simply doesn't add up. At certain price levels, owning is more attractive than renting. The disastrous fiscal policies of the Bush administration have created a massive real estate bubble in the US (yes, even in Brooklyn) and the next few years will not be pretty.