Dan Gillmor has a good post today linking to stories in a couple of Bay Area newspapers about the housing bubble. I have written about this before and I believe that it is really important that people pay attention to this. It is downright stupid for people to be committed to paying upwards of 40% of there income on a mortgage(s) that they are not even accumulating any equity in. If you cannot afford to pay enough to actually pay down some principal on a mortgage you should be renting. I don’t want to exclude anyone from homeownership but if someone can’t afford they are not doing themselves any favors by taking on crushing amounts of debt with no realistic hope of ever paying it off. And with the changes in bankruptcy law this year, when the bubble does burst people are not going to be able to escape the debt like they might have in the past. If you are in this kind of position, get out now while you still can.

Today’s San Francisco Chronicle and San Jose Mercury News both have articles about the crazy Bay Area housing market. I read both as warning shouts from the rooftops, but I suspect most readers will see a more Pollyanish angle.

The Merc’s story, headlined “Home buyers get comfy with debt,” begins:

Brett and Sarah Klynn could be poster-children for a new, innovative generation of California home buyers that, despite soaring prices, has taken on crushing debt to push homeownership to its highest level in decades. The Klynns, both in their 20s, took out five loans to buy a two-bedroom, two-bath condo near San Jose’s Kelley Park in May. They are spending roughly 45 percent of their income on their home, a not uncommon portion for new home buyers.

I would not use the word “innovative” to describe this kind of behavior. But then, I don’t think people should be taking such risks.

Meanwhile, the Chronicle’s story — more apty headlined “”How Do They Afford It?” — has a similar theme. It starts:

The housing market is red-hot in the Bay Area. So, who’s buying those pricey homes — and how are they able to do it? The answers: Young professionals. Riskier loans. Longer commutes. Smaller houses. And, in some cases, a lot of peanut butter and jelly. With Hayes Valley condos selling for $750,000 and Livermore tract homes fetching $1.3 million, the question is on everyone’s lips: Who’s paying these stratospheric prices? The answer, increasingly, is young professionals who are devoting exorbitant portions of their incomes to housing, according to a new study.

Will the message for readers be that these “home buyers” (an expression that makes little sense given the hyper-leverage involved) are doing the smart thing? Or that they’re running unbelievable risks that, for many, will end in tears?

I suspect the latter, but as prices continue to rise the optimists are controlling the game.

Oh, wait. Prices aren’t rising, or at least they didn’t last month — showing the first (albeit) tiny month-to-month dip in a while. But the year-over-year price is still at a record, by far.

Lenders keep raising the limits of what they’ll loan, meanwhile. They keep offering interest-only or nothing-down loans, to more and more people. It’s corporate irresponsibility and greed fueling individual irresponsibility and greed. So American. So risky. So scary.

The San Jose Mercury News story

The San Francisco Chronicle story