Adriene Hill: Later this morning, we'll get new mortgage numbers and new data from the National Association of Home Builders. The housing market bubble has many folks more comfortable renting than buying these days.
Fortune magazine's Allan Sloane joins us now to talk about the reluctance to sign that mortgage. Good morning Allan.
Allan Sloan: Good morning, Adriene.
Hill: So how does the price of renting compare to the price of owning right now?
Sloan: Well right now, the price of owning the average house is lower than the average rent, which is a relatively recent phenomenon.
Hill: And how does that compare historically?
Sloan: Well historically, the cost of owning a house, you know, the basic payments on the house and the taxes were considerably higher than the average rent. About three years ago, the lines crossed, and the gap has been widening. This is very unusual. Back during the housing bubble, houses were 20, 30 percent more than renting. Now the difference is the other way.
Hill: Now, does it mark some bigger shift in how people think about the value of the property or even the value of mobility in this day and age when it's hard to sell a house quickly?
Sloan: I think it may mark more fear than anything else. During what we are now calling the bubble for five years, the price of houses went up to levels that were insane, but everyone was running in to buy houses because they figured if they wouldn't get it now it would be more expensive next year or next week. For the past few years, with houses going down, people don't want a house because they figure it'll be cheaper to buy next year, 'why should I buy it now and take a risk?' And sooner or later, this is all going to average out, but I'm not sure when.
Hill: I guess that's my last question: How long might this take? If this is a market overreaction, if people are responding with fear, how long does it take to resolve, maybe compared to the housing bubble?
Sloan: Now, you see, if I knew that, Adriene, I would be so smart and so rich that I wouldn't have to write for a living, I would just be a real estate investor. The answer is: I don't know.
Hill: Allan Sloan, senior editor-at-large at Fortune. Thanks so much.
Sloan: You're welcome Adriene, it was my pleasure.