The Hidden Cost of Rising Housing Prices
It’s been driving me nuts for years. I’m a gainfully employed man who makes, by all accounts, a decent living. I’m not raking in huge amounts of money by any stretch, but I’m comfortable. Yet because of the ridiculous cost of housing in this state (MA), I cannot afford to live anywhere within 45 minutes of my current residence (an apartment), and even then only condos would be in my price range (most of which are old apartments that have been repurposed, but still have all the flaws of shoddy apartment construction). The only way I could afford a house is if I got married, which is right around “castration” on my list of things to do with my life, because I’d need the dual income to afford the mortgage and taxes. I comfort myself in the knowledge that it won’t last forever; the bubble will burst. Of course, the house-poor have visions of huge paydays in their future, when the $500,000 they shelled out for a 3 bedroom, 1 bath ranch in the suburbs becomes a $600,000 sale. When I tell them that the bubble can’t last forever because the rising cost of housing is eventually going to ruin the state economy, they tend to block their ears and recite things like, “La la la la la la I can’t hear you la la la la la la”.
On what do I base my opinion that the state economy is on the road to ruin? Some of the prime sources of revenue for this state are derived from Medical, Biotechnological and Educational business in and around Boston. Traditionally, this state has been a haven for those professionals looking to be on the cutting edge of the medical and biotech industries. Unfortunately, the state also has a high-concentration of managed-care providers and a ridiculous housing market that has gotten more and more out of control as the years have passed. What has been happening over the last few years is that graduates from our esteemed colleges and universities aren’t hanging around to provide the city’s industries with fresh blood. Furthermore, the recruitment of new doctors and scientists has become much more difficult as these professionals compare cost of living with salaries and realize that they’d actually make a bunch more money in just about any state except California. But California has taken the lead with stem cell research while Massachusetts government has been wrangling with the ethics and morals of stem cell research which, regardless of your position on the matter, has soured some biotechs on the merits of this city.
Check out this story from 2002 and this article from a healthcare organization in 2001. Now check out this article from the Boston Herald earlier this week. Notice that they don’t mention any reasons why there’s a “dearth of doctors”, but I think the previous articles provide some clues.
So let’s review:
- The state’s economy relies on healthcare and biotech
- The cost of housing in this state is casuing overall living costs to spiral out of control
- New graduates are leaving the state instead of staying
- The number of Doctors and scientists entering MA to practice is steadily declining because of cost of living increases
- The industry begins to leave the state for “greener pastures”
- The state economy falters as our best businesses depart
- The housing bubble bursts
- Assuming I’m still employed, I might be able to afford a house!
I guess one might call the slowing of entire state’s economy a hidden cost of rising housing prices. Of course, I’ve known about it for years, but not because I’m some sort of “wicked smaht guy” but because I’ve paid attention to the news. So technically it shouldn’t be all that hidden to the rest of you astute folks out there.
I can be accused of complaining about something without offering solutions, and I would be guilty. I don’t know how to keep the housing market from imploding anymore than I knew how to keep it from exploding. I don’t think it’s something that needs governmental intervention because it’s the free market, and because I’m generally opposed to rampant governmental regulation/legislation/intervention. All I know is that, just like most overpriced items today, if people are dumb enough to pay ridiculous prices for items, then the prices will just continue to grow. The way things seem to work, however, means that eventually there will be a “correction”. Unfortunately, a lot of people will get hurt financially by this correction. I just hope people start to develop long-term vision so that the crash can be at least somewhat mitigated.
