Home Ownership: Popular, But Not Good Investment...

[James H. Bushart]

....per TIME Magazine.

[Steven C. Waskewicz]

Only towards the end of the article, did they hit upon the truth of the matter.

"That means that the American Dream is not necessarily a dream about profits or upside. It’s a dream about designing and keeping maximum control over your own lifestyle, tax-advantaged. It’s about the prospect of one day owning where you live, free-and-clear."

[Waqar Quraishi]

Home Ownership is always unpopular when the going gets tough, and it's not only "Good Investment" for most of us, but the "Very Best."
There's no doubt that the Real Estate market is gathering momentum in many localities.

[Roy D. Cooke, Sr]

No way am I leaving our Home except in a Pine box ... Roy

[Michael Larson]

Very nice Roy.

Hopefully you last a very long time.

[Roy D. Cooke, Sr]

Originally Posted by mlarson

Very nice Roy.

Hopefully you last a very long time.

Thanks Mickael and you the same .
Happy fourth to all our southern Friends tomorrw from Char and Roy Cooke

[bdoles2]

Originally Posted by rcooke

No way am I leaving our Home except in a Pine box ... Roy

Beautiful flowers Roy...

[Aubrey J. Kahn]

Buying a home is not a good investment for most people because they either sell and move (Americans do this on average every 7-9 years) or they never actually manage to pay off the mortgage which means they are renting from the bank all their lives. If you can pay off the house and continue to live in it then and only then is home ownership an investment.

[Waqar Quraishi]

Originally Posted by akahn

Buying a home is not a good investment for most people because they either sell and move (Americans do this on average every 7-9 years) or they never actually manage to pay off the mortgage which means they are renting from the bank all their lives. If you can pay off the house and continue to live in it then and only then is home ownership an investment.

Most long term sensible investments pay substantial return. Housing is such, look around you, a house bought 20 years ago has on average doubled and we are not talking NY city. Property value do increase as it has done since the advent of shelter popularity. One has to pay significant down payment or all cash, to purchase dwellings in many part of this world.

If you have noticed, the good Lord has stopped making habitable land. There is only so much resources for 7 billion of us. We are blessed, while you are paying mortgage you are getting deductions and tax write offs. When things get hard, the offspring live free. If you, the majordomo, has saved and paid the mortgage then its time to collect rent. And there is no prepayment mortgage penalty like in the past, as many have been paying within 15 years.

Short term investments are speculation, real estate is an investment for the future, protection against inflation. It has always gone up and will do so as long as the cost of living increases. Truism, indeed.

[James H. Bushart]

This is not a political statement and I will not respond to the usual nonsensical and off-the-wall ramblings that may be prompted...but I simply invite you to do a little math.

Shortly after WWII, there was a big need for housing as the soldiers returned from war. Real estate began to boom and, as these men and women settled into these homes and began to pro-create...we had the "Baby Boomer" generation that ... when they began to purchase homes in the 70's and 80's ... and upgraded into bigger homes in the 90's....fueled the exponential increase in houses being built and their prices.

As the Baby Boomers begin to retire ... and downsize ... and die ... they are replaced by a generation of Americans of dwindling numbers. You can blame abortion, birth control pills or any other factors .... but there are millions of homes becoming available to only hundreds of thousands who will be habitating them.

The supply already exceeds the demand and that number, while it may fluctuate from quarter to quarter based on investment purchases, is likely to continue to increase into the next generation.

Already, builders are realizing that there is more work to be found in remodelling and "weatherizing" existing homes than making new ones. This is not, IMO, a temporary phenomenon.

Buying a home in 2011 and expecting it to "double" in value in one's lifetime is no longer a likely event if the next generation --- much smaller in number and much more focused on efficiency than size --- are the ones buying the houses that their much more populated predecessors leave behind.

It's all in the numbers. Buying a house will be a good thing for someone wanting to own and control where they live and not be subjected to the will or control of someone else over how they decorate or otherwise maintain their dwelling .... but the idea of making $2 for every $1 they invest in a home was a temporary thing that is gone until the generation following the next "Baby Boom".

[Waqar Quraishi]

The attractive land to build are diminishing and getting extremely expensive, that is why the builders may want to remodel, etc. The era of WWII had a unique metamorphic aura, the USA was building, exporting and collecting from the know how in all fields of the economy, globally.
To expect a windfall in a short duration from real estate investment is not thinkable but when oil jumps to $150 plus and the drought and commodity rush reaches to unthinkable stages then all may become evident. History repeats in unfashionable style.

[Christopher Currins]

Originally Posted by jbushart

This is not a political statement and I will not respond to the usual nonsensical and off-the-wall ramblings that may be prompted...but I simply invite you to do a little math.

Shortly after WWII, there was a big need for housing as the soldiers returned from war. Real estate began to boom and, as these men and women settled into these homes and began to pro-create...we had the "Baby Boomer" generation that ... when they began to purchase homes in the 70's and 80's ... and upgraded into bigger homes in the 90's....fueled the exponential increase in houses being built and their prices.

As the Baby Boomers begin to retire ... and downsize ... and die ... they are replaced by a generation of Americans of dwindling numbers. You can blame abortion, birth control pills or any other factors .... but there are millions of homes becoming available to only hundreds of thousands who will be habitating them.

The supply already exceeds the demand and that number, while it may fluctuate from quarter to quarter based on investment purchases, is likely to continue to increase into the next generation.

Already, builders are realizing that there is more work to be found in remodelling and "weatherizing" existing homes than making new ones. This is not, IMO, a temporary phenomenon.

Buying a home in 2011 and expecting it to "double" in value in one's lifetime is no longer a likely event if the next generation --- much smaller in number and much more focused on efficiency than size --- are the ones buying the houses that their much more populated predecessors leave behind.

It's all in the numbers. Buying a house will be a good thing for someone wanting to own and control where they live and not be subjected to the will or control of someone else over how they decorate or otherwise maintain their dwelling .... but the idea of making $2 for every $1 they invest in a home was a temporary thing that is gone until the generation following the next "Baby Boom".

A little math.

U.S. Population:

1950 - 152,271,417

2009 - 307,006,550


A little logic.

A large majority of homes built within 10 yrs. or so after WW II were junk and have either been torn down or need replaced.

[James H. Bushart]

The older population--persons 65 years or older--numbered 39.6 million in 2009 (the latest year for which data is available). They represented 12.9% of the U.S. population, about one in every eight Americans. By 2030, there will be about 72.1 million older persons, more than twice their number in 2000. People 65+ represented 12.4% of the population in the year 2000 but are expected to grow to be 19% of the population by 2030.

Aging Americans will be buying fewer cars and houses as they increase in their share of the overall population. Demand decreases ... prices decrease, as well. It has already begun.

Increases in revenues and decreases in overall entitlements (which our government is presently...and reluctantly...moving toward) are not going to decrease a deficit but simply maintain the status quo in a shrinking economy.

Buy a new home because you want to live in one, but do not expect your "investment" to increase at the rates you saw in the previous decade or two. It just isn't going to happen because the demand is simply not there (or projected to be in the immediate future).

[James H. Bushart]

For homes of older householders in 2007, the median construction year was 1970 (it was 1974 for all householders). Older people, while increasing in percentage of American households, are not the ones buying the newer homes. That percentage of the population is decreasing in size.

Look at the number of real estate salesmen in the U.S. as the Baby Boomers began to mature and buy houses in the early 70s. Note as to how the number of salesmen grew exponentially --- not based upon population growth in the U.S. but strictly based upon the unprecedented increase in demand that was created by that segment of the population at that time. Then, note as to how it peaked in 2006 and has declined as these same Baby Boomers begin to retire and fewer are in the market for new homes. Retired people make fewer moves due to job changes, etc. Their families are not growing in size demanding bigger, newer spaces. They don't buy "second homes" to enjoy vacations in. Instead, they are downsizing and many are retiring into multi-family "community" type dwellings....or simply dying....and leaving more vacant dwelling units instead of demanding more dwelling units as they did in the preceding decades.

If I were a real estate saleman looking to comfort myself or encourage others to work for me for a straight commission ... I would be seeking and arguing some other short term condition that is sure to turn itself around next quarter, too. I would also be preparing myself for another line of work. I, too, would be jumping on any monthly statistic that seemed to provide evidence that the trend of the last five years is turning around instead of accellerating. Who could blame me?

We will certainly see fluctuations during this long period of decline and ... regionally, as people leave one unfavorable climate or economically depressed area in favor of other areas ... there may be pockets of temporary "recovery". Still, the fact remains that the generations that are following us Baby Boomers are less in number, have less in buying power and are not too impressed with the "investments" that they have watched bottom out before their very eyes as they look at the present glut of houses.

They will buy houses. Not in great number and not in extravagant and energy inefficient sizes ... and definitely not as "investments", but simply as places to live.

[Waqar Quraishi]

2006, 2007 was a great time period to offer advise that Housing and Real estate were bad investments, one would have gained significant fame and fortune. But one was "gung-ho" like at present only this time equally opposite.
Investment is not for everyone and understanding investment is even harder, much to our dismay.