Housing Bubble 2.0

There’s a new, improved housing bubble going on all across the USA. It is going to end badly, as it did before. But meanwhile prices keep climbing, and that is squeezing both buyers and renters.

Take a look at the Culver City crap shack in the article linked to in the previous paragraph. At $782 per square foot, that may seem like a lot to my fellow Vermonters. But to a former Californian like me, it’s peanuts. In 2008 I was living in a mobile home in Palo Alto (in the only mobile home park in the town). Just down the block a 780 square foot house went up for sale with an asking price of $700,000. That’s $923 per square foot. According to Zillow, it sold for $675,000 a few months later, which must have been a huge disappointment to the seller.

But the story gets happier. The new owner sold the house in $2013 for $1,070,000, or $1372 per square foot. That was a 59% increase in value in just five years. Eat your heart out, Culver City!

This is one of the main reasons why I left California in 2009. At that point, Housing Bubble 1.0 had burst, but prices were still too high. I didn’t expect another bubble, and so soon, but it looks like nobody learned from history.