Trends indicate that Housing Bubble II is on the way.

A quote from a new homeowner caught my eye this morning, “In theory, my mortgage will always go down and rent will go up. It’s an investment that I see being long term.” This 37-year-old New York freelancer is gambling that instead of spending money each month on rent that she can’t recoup, she can rent out part of her new home to subsidize her mortgage.

The problem is this is the same philosophy that got many (new) homeowners into trouble just before the housing bubble popped. It goes something like this: I want this home and even though it’s expensive now it will become more affordable as time goes by and I have an income source that can cover the expenses so I’m all good!

Sounds reasonable until the bottom falls out of the housing market and income sources dries up -whether that’s a lost job or a shift in the rental market. New research suggests the latter is at play.

Although home buying is still more affordable than renting, according to a new report, that is changing fast nationwide and in some cities:

Buying is now 35 percent more affordable than renting, compared with a 45 percent difference a year ago, according to a report released today by Trulia, whose calculation uses average rents and sales prices listed on its website, assumes the buyer stays for seven years, and takes into account ownership and rental costs including mortgage payments, property taxes and insurance.

For buyers in Orange County, Calif., the New York area, New Jersey and San Diego, the cost of homeownership is cheaper than renting by at least 20 percent. In Honolulu, the affordability gap has narrowed faster, making it 10 percent less expensive to buy than rent, compared with 24 percent last year.

In San Francisco, where home values gained 24.5 percent in June from a year ago, Trulia calculates owning is now cheaper than renting by just 9 percent, compared with 28 percent a year ago. San Jose, Calif., where it’s 4 percent cheaper to buy, is closest to reaching a tipping point, the data show. Buying a home is most affordable in Detroit, Gary, Ind., Memphis, Tenn., and Cleveland, according to Trulia.

The rise in rentals as you can guess was driven by foreclosures and homeowners selling their properties at a loss since 2007 –some 4 million foreclosures according to estimates. Homeownership actually fell to its lowest level this year according to the Census Bureau.

There are likely other factors driving the higher rental rates such as the delay of first-time homeownership by millennials whose face high unemployment rates.

What I read into all of these numbers is that while it’s good to be a homeowner who can secure or supplement her income from renting out property, a tipping point is approaching –and perhaps quickly- that will mark a reversal of Americans renting back to buying homes. The resulting drop in demand for rental will hurt those homebuyers who are depending on rental income.

Leaving it to the economists to predict when that might happen let’s explore the psyche of some homeowners like the woman in the story above.

Homeownership is intrinsic to the American dream. It marks independence, stability, assimilation, and permanence. It connects people to each other, fosters interconnectedness, and builds community. Homeownership also fuels economic development, spurs entrepreneurship and drives industry of all kinds. The picture of success for immigrants and native-born residents alike is working hard, saving up and buying that first/starter home, expanding to a bigger home as the family grows, and passing on that property or selling to a new young, family in the future.

The most recent economic recession eroded the homeownership dream. Many families, who proudly became homebuyers watched as the houses on which they could not make payments, were taken away by financial institutions or the government. They in turn were forced to rent other living quarters, move in with parents and family members, or in extreme cases seek help from shelters and charity.

Plenty of blame has been passed around for the housing crisis that drove the recession, but let’s admit that for some homeowners their own greed clouded their better judgment. Granted, predatory marketing and lending practices enticed people to buy more home than they could truly afford, but any scrupulous or unscrupulous practices could have been successful only if homebuyers choose to take the offers extended to them. And why not? Housing prices just kept climbing dragging house values up with them and many Americans believed that the value of their homes would just keep rising while their mortgages declined as they ate up the debt.

This brings us back to the comment from the freelancer that “In theory, my mortgage will always go down and rent will go up.” I hope this person represents and anomaly and not the norm. For her sake I hope she's right.