4.27.2005

Value

Econo-Girl doesn't want to betray her sordid past by describing why she thinks 'value' is how much cash you can get for selling something. But when your gimlet eye surveys your closet, weighing what you can pawn, you come to terms with the reality of 'value'.

So that special set of golf clubs was not an 'investment' after all. Hint: Investments pay you money.

So that house isn't going to make you a millionaire. Ha! Gotcha! Am I unfashionable? Isn't a house like Microsoft stock in 1985?

What is the value of a house? What you can talk some fool into paying for it. What is maintaining the value of the house? Hoping some fool somewhere will always pay that amount.

So are we overpriced in the DC region in the housing market? Yes. First, the cost of renting should be about the mortgage for the same home. Right now it is much cheaper to rent, indicating that mortgages and house costs are too high. Second, the median income cannot buy the median-priced house.

Econo-Girl's prediction is that a noticable POP of the housing bubble will come this September, and economists will notice when the numbers come in October.

You heard it here first!

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