Wharton Profs say Bubble, no Trouble
Todd Sinai, associate professor of real estate at the Wharton School at the University of Pennsylvania, derides bubble theorists as “Chicken Littles.” His article, “Bubble trouble? Not likely,” published Sept. 19 in the Wall Street Journal, explains research that he and co-author Chris Mayer conducted. While acknowledging “rampant growth” in real estate, they looked at the annual cost of owning a house – one’s outlay for mortgage payments, fees, maintenance and the like, minus benefits like interest deductions and depreciation. If you close your eyes to the huge price tags and concentrate on those annual costs, then prices have stayed pretty reasonable in all but the most expensive (Boston, Miami, San Diego) markets — largely because of historically low interest rates, they concluded.
