blockitecture leaderboard

Why Home Prices Are About To Crash

The editor of the Washington Monthly points out compelling signs that the housing bubble is about to burst.

"Only in about 20 metro areas, mostly located in eight states, does the relationship of home price to income defy logic. The bad news is that those areas contain roughly half the housing wealth of the country. In California, the price of a home stands at 8.3 times the annual family income of its occupants; in Massachusetts, the ratio is 5.9:1; in Hawaii, a stunning, 10.1:1. To some extent, there are sound and basic economic reasons for this anomaly: supply and demand. Salaries in these areas have been going up faster than in the nation as a whole. The other is supply: These metro areas are "built out," with zoning ordinances that limit the ability of developers to add new homes. But at some point, incomes simply can't sustain the prices. That point has now been reached. In California, a middle-class family with two earners each making $50,000 a year now owns, on average, an $830,000 home. In the late 80s, the last time these eight states saw price-to-income ratios this high, the real estate market collapsed."

Thanks to Chris Steins

Full Story: There Goes the Neighborhood

Comments

Build Your Own Paper Block City

Urban Fold is an all-inclusive kit that allows anyone to build the city of their dreams with a few simple folds.
$24.95
building block set

NEW! Build the world you want to see

Irresistible block set for adults when placed on a coffee table or desk, and great fun for kids.
$25

Wear your city with style!

100% silk scarves feature detailed city maps. Choose from six cities with red or blue trim.
$55.00

City Map Posters are in!

Available in 9 different cities.
$25.00