The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: J. P. who wrote (2211)	11/16/2003 11:08:34 AM
From: philv	Read Replies (1) of 110194

The cost of home ownership or affordability is to a great extent related to interest rates. You can determine a bubble by comparing the price of the home to how much it can be rented out for. Real estate people use a formula to determine if for example a rental property for sale is priced right considering todays interest rate and some other factors. A very small increase in interest rates dramatically changes the picture. You need a huge income to afford a mortgage at todays price, even at our record low interest rates. I doubt if flipping burgers qualifies, and good jobs are evaporating. Our standards of living is dropping while the price of housing is rising. A sure formula for future disaster imho. The fireworks begin when interest rates begin to rise.

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