Housing Bubble Angst

Last night on Ben Jones' excellent Housing Bubble Blog, a very interesting series of posts were made. While the commentary was lively, there was a very clear and recurring sense of angst - just what type of person would be feeling anxious, or uncomfortable in any way, while in the midst of unprecedented increases in personal wealth, largely as result of rising real estate prices?

Some people may feel this way because they have never owned a home and are currently renting - they now find themselves priced out of their desired market, and deem this to be unfair. Had they been born a few years earlier or married sooner, they would have been able to purchase a home at a reasonable price and would be well on their way to amassing a great fortune - maybe they would have been able to "trade up" by now, and instead of being on the outside looking in, they'd be enjoying truly spectacular digs. It seems timing has become increasingly important to every individual's financial success in life - much more so than a few generations ago.

Or, perhaps they are renters who some time ago sold their home with the intention of buying again "after the crash", and they are now perplexed by both the continued price escalation and general insanity of it all - growing impatient with the pace at which real estate prices make their inevitable return toward long established trendlines. They feel that they understood things that others did not and due to this superior reasoning ability, they took action - but they are now restless, waiting for their shrewd wager to pay off.

Perhaps they are homeowners who have dramatically improved their standard of living as a result of the equity "built up" in their home over the last few years - never has it been so easy to "build" anything before ... truly a "lazy man's way to riches". They wonder if maybe they have "tapped" too much of this equity - if maybe they have been fooled in some way ... duped into spending money which they shouldn't have. The thrill of the purchases having long since passed, the debt remains, and it becomes more costly to service as the months go by.

Perhaps they are homeowners who have acted responsibly over the last few years - they have resisted the temptation to spend their home equity to purchase things that their grandparents would surely consider foolish. But, somehow they feel left out - there is an apparent "standard of living gap" between they and others of similar means. They look around and wonder what exactly is going on with home prices, and they search for explanations for why people are behaving as they are.

A common thread for all these people is an underlying sense that something is wrong - something is very wrong with the way homes are bought and sold today. It didn't used to be this way - what has happened in the five years since the Nasdaq bubble burst? How can things go on like this and what happens if they stop going on like this?

In the coming months and years, more people will take notice, and more people will search for explanations for what they see happening around them - and there will be a lot more angst.