It used to be that the most you should spend on your housing per month was 25% of your income. So let’s say your take home is $4000 a month (solidly middle class.) There aren’t many major metropolitan areas where you can either buy or rent for $1000 a month (excluding Detroit however.) So many people spend way more than the 25%. If they’re doing that, they’re not saving for retirement, their child’s college education, or for a rainy day.

There was a story recently about an 83 year old man who bought his first house in a Miami suburb last month. It sold for $225,000 at one point but he got it in foreclosure for $73,000. His monthly payment is $550 a month- well within his social security payment and most likely cheaper (and nicer) than renting. Good for him!

Only when Americans are paying about 20% to 25% of their income on housing will the economy really bounce back. Until then, Americans can’t invest. Without savings and investment, there’s no growth.

The housing bubble was unproductive. Too much time and effort was wasted on granite counter tops. It’s time to focus on new priorities.

I liked the article. As an older citizen, we were programmed to think that buying a house was the single most important investment a person would be making in their lifetime. You saved money to buy a house. When we bought we never looked at it as an investment (although it was), more like buying a home. You bought what you could afford, not really taking into account that the house might be worth more in the future. I think nowadays people buy homes as investments(as demonstrated by your article), and it is too huge an investment to mess with, especially in this market. Who knows what any piece of property is going to be worth in the future. Buy what you can afford, or what you love. Well I’m rambling, your article was good food for thought.

One of the great “in-house” businesses that America can still lay claim to is the higher education industry. If you think of the one industry that is not out sourced, but rather insourced, it would be our University system.

The above comments about a potential “bubble burst” in this field is a really interesting topic. The costs are becoming out of control and as I stated before the benefits are not certain. As other countries begin to raise their standard of living, their school systems will improve, which will in turn attract many of our foreign students causing a “brain drain”. But perhaps this potentially could be a situation where we’re reminded why competion is good. Who knows, maybe someday it’ll be cheaper and more prestigious for an American national to go to the Univeristy of Bangladesh as opposed to the University of Illinois. If this fantasy scenario rings true………

Will this force Universities in the United States to lower their costs to remain competitive? Or will their balance sheet begin to consistantly fall in the red rather than black causing them to fold. And consequently “Bursting the American University Bubble’?

Great post. You’re right, housing typically has never been a great investment. When you factor in taxes and upkeep, buying a rental property these days still doesn’t make sense. The fundamentals in housing are still bad. Having a $4000 mortgage and only being able to collect $3300 in rent is negative cash flow. Plus when you throw in taxes, upkeep, and being a landlord– buying stocks and bonds seems a lot better.

Being a father of two very smart little girls, that will certianly be going to college. I hope it is the next bubble. But the worldly demand for the best of higher education will not go away. And its here in America.