"Trapped in the Bubble"

Nice story in the New York Times today about another problem created by the housing bubble:

In the hottest markets, owners whose homes have skyrocketed in value find themselves in a frustrating paradox. They were supposed to be the lucky ones: they bought in frenzied real estate markets like New York and Los Angeles three or more years ago and have amassed hundreds of thousands of dollars on paper.

But as they try to roll that considerable equity into a bigger home, many are unpleasantly surprised to find that the cost of real estate at the higher end has outpaced their ability to buy. For homeowners who have watched the torrid housing market create wealth as if by magic, scanning the classified ads or visiting a few open houses serves as a harsh reality check.

The story features comments from several families, and even gets into the financing predicament that some create for themselves by taking out interest-only loans. It's worth your time to read it.