Tuesday, June 07, 2005
Housing bubble in Portland?
If people are paying $100,000 more than the asking price for houses and buying houses sight unseen and leaving them vacant for a year before reselling them, then you probably have a housing bubble. In the Portland suburb of Lake Oswego, residents are disturbed that people are paying $250,000 for houses, tearing them down, and replacing them with million-dollar dwellings. "I feel like riff-raff in my own neighborhood," says one.
But the real worry should be that the Portland area has run out of land for new housing, so people are paying through the nose for "infill" housing. What happens to families who paid $300,000 or more for homes they can't afford when interest rates go up and suddenly their homes are worth far less than the mortgage they have yet to pay on them? What happens to an urban area when large numbers of foreclosures boot people out of their homes and leave families bankrupt? What happens to the nation when the smart-growth driven housing bubble bursts and a major sector that has kept our economy going for the last decade is on the rocks?
But the real worry should be that the Portland area has run out of land for new housing, so people are paying through the nose for "infill" housing. What happens to families who paid $300,000 or more for homes they can't afford when interest rates go up and suddenly their homes are worth far less than the mortgage they have yet to pay on them? What happens to an urban area when large numbers of foreclosures boot people out of their homes and leave families bankrupt? What happens to the nation when the smart-growth driven housing bubble bursts and a major sector that has kept our economy going for the last decade is on the rocks?
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