Thursday, May 4, 2006

Why the Housing Bubble Is Popping, In 50 Words Or Less

Author: Nick
Category: Money
Topics:

little plastic monopoly house - $350,000

This Fortune article found via the Housing Bubble Blog will tell you in a few hundred words why housing prices are going to drop (if they’re not already). Allow me to tell you why housing prices are going to drop in fifty words or less.

Housing prices skyrocket. Property taxes skyrocket. Interest rates skyrocket. Your pay doesn’t skyrocket. You need a house. That guy selling a house can’t control taxes or interest rates. You can’t afford that house. To sell you the house, that guy must drop the price. Now you can afford the house.

Ooh, fifty words exactly. How grand!

And sure, it’s a little more complicated than that, but the reason for the bursting housing bubble is not some complicated economic formula that depends on per capita gross domestic gobbledygook. It depends on you, and you’re the one with the money to buy a house. And when you and everyone around you stops being able to afford a house, that house ain’t gettin’ lived in unless it costs less.

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