Re: “Save subprime borrowers, not bloated bankers” by Dean Baker
On Aug 21, 2007, at 1:22 PM, Jordan Hayes wrote:
I’m curious what you put in for the values for this 15 year break
even; was it by any chance your very-low-and-rent-controlled apartment? :)
No - market values in Fort Greene, Brooklyn. $2000 rental = $500,000
of house.
I look back at the apartments I rented over the years in Manhattan and shake my head: if I had bought any of them at the time, I’d be rich today.
Yes, but the past 12 years or so have been an extraordinary boom. As
Andrew Beveridge pointed out on my radio show the other week, NYC
housing costs are already above the “affordable” level relative to
incomes; I doubt prices can double from here, as they did from
2000-2006 (according to the Case-Shiller-Weiss index for the NY metro
market). They were up “only” 25% from 1994-2000, and were flat from
1987 (when the series begins) to 1993.
Nationally, for the century before 1995, house prices on Shiller’s
reckoning only rose about 1% above the rate ofinflation. The curve
kinks in 1995, and kinks more sharply around 2001.
There’s no reason why, over the long term, house prices should rise
faster than incomes, is there?
Doug