Wednesday, December 05, 2012

Death Spiral States

Besides needing my capital for trading purposes, I've always been reluctant to buy a house in CA because prices seemed too high here, and I thought that they would have to come down due to 1) the rule of thumb of disposable income to housing costs, 2) that the mortgage interest deduction would eventually disappear (after all anyone who has enough money to own their own house must be rich!), 3) the state and its populace seem very intent on vilifying and penalizing businesses in general, hence the economic prospects long term seem pretty poor.  A recent Forbes article adds a fourth reason (though it's not strictly independent of my reason #3): Don’t buy a house in a state where private sector workers are outnumbered by folks dependent on government.

(I should also note that I've been generally wrong about the housing market, so this isn't a recommendation of any kind, just my personal conclusion.)

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