Tuesday, September 4, 2007

Say hello to the Rhode Island bubble




This is a first for the overvalued blog - a nasty one bedroom wreck from Rhode Island. This garden shed in Weekapaug is on the market for $950,000.

The write-up claims that the property is "very affordable". Assuming that the new owner takes out a no-money-down, 30 year fixed mortgage at 6.5 percent, the monthly payment including taxes will be a few dollars short of $6,500. Over a year, housing costs comes to $78,000 per year. The median income in America is $58,000 per year. That means that half of the population could not afford this house even if they i) did not eat, ii) use utilities and iii) received an annual gratuity of $20,000 from their financially naive grandmother.

Thank you Marie for this one. The MLS number is 635363.

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