pop!

The big billboard in front of my new condo building was recently changed from an add for the condo to an add for the Massachusetts Association for Brain Injuries. Coincidence..?

Despite my better judgment, I finally took the plunge and bought a condo last spring. Or rather, my credit union bought a condo, which they let me live in as long as I pay them a king's ransom every month. Really, it would be just like renting, if there were a landlord to fix the plumbing and if I didn't have to pay condo fees and real estate taxes. And if there weren't the looming threat of financial ruin if the local housing market does collapse.

Everyone says buying is cheaper than renting in the long run - the big tax breaks, the rent-to-own philosophy of a mortgage. Equity, they call it. Well, I did the math, and the property taxes, condo fees, mortgage interest, and PMI (PMI?!!!) pretty much cancel out the tax breaks, at least for me. The only way to come out ahead is for the real estate market to go up. I'm not even looking to get ahead; all I want is to break even. Is that so much to ask?

So Alan Greenspan recently said that while he doesn't see a national real estate bubble, he does see lots of local bubbles. Gee, thanks Al, that helps a lot, given that I and so many other Americans are so heavily invested in the national real estate market. Nothing to worry about there. And while you're at it, Al, do you think you could jack up interest rates another couple of points so that you can squeeze the lid down just a bit more?

All these magazine articles say real estate is different from other investments, and I hope they're right. But it sure feels the same way the tech runup in the late 90's did, doesn't it? And the runaway growth that so many markets have seen is just fundamentally unsustainable...at some point, you can't spend more on your mortgage than you make in a month, even if you have the lowest-rate interest-only ARM you can find.

This isn't going to have a happy ending.