Homeownership no longer the American dream?
Though housing prices have dropped to new lows, folks aren't sure a home is a solid investment anymore.
This post was written by Kim Peterson for MSN Money.
Houses are dirt cheap right now. In fact, homes are more affordable than at any time since the National Association of Realtors began measuring the data back in 1970, Bloomberg reports.
But people aren't buying. The economy and the tightened lending market have all but removed the possibility of homeownership for some. But there's another interesting sentiment developing: More and more people just don't want to buy anymore.
The percentage of people who think of a home as a safe investment has dropped to just 64%, Bloomberg reports. That's the lowest ever reported in the national housing survey from Fannie Mae, and down from 83% in 2003.
So many people have turned away from homebuying, in fact, that we may be seeing a culture shift. Maybe the house with a white picket fence is no longer part of the American dream.
Well-known investor James Altucher lists several reasons owning a home is a bad idea in a recent blog post. Housing prices historically haven't risen enough to merit that huge down payment, he said. Homeowners also must deal with closing costs, pricey maintenance, property taxes and the fact that most of their life savings is tied up in one investment.
"I'm never going to buy a home again," Altucher writes. "And sit there in the middle of the night thinking, 'Why the hell did I do this to myself again?'"
Other renters feel the same way. "The magnitude of the housing crash caused permanent changes in the way some people view homeownership," one finance professor told Bloomberg. "Even as the economy improves, there are some who will never buy a home, because their confidence in real estate is gone."You can almost see this conflict playing out in the stock price of homebuilders such as Toll Brothers (TOL). Check out the one-year price chart to the left. Investors don't know what to think of this sector. The three-year chart is even more telling.
Economists tell Bloomberg that the economic crisis destroyed the notion of a house as a risk-free investment. It was just a standard assumption that whatever house you bought would increase in value. No one expected to be underwater on their mortgage or in foreclosure.
But at the end of last year, a shockingly high 11 million homes in the U.S. were worth less than what owners owed on their mortgages, Bloomberg reports.
And in March, the percentage of Americans who plan to buy a home in the next six months fell by 23%. Certainly that share will recover as the economy improves. But it will be very interesting to see the long-term chart of this sentiment. Are we becoming a nation of renters?
MORE ON MSN MONEY
VIDEO ON MSN MONEY
The percentage of people who think of a home as a safe investment has dropped to just 64%, Bloomberg reports. That's the lowest ever reported in the national housing survey from Fannie Mae, and down from 83% in 2003.
It is about time. This con has run long enough. The propaganda affect has finally run its course loosing a lot of its power to deceive. I for one am glade that perceptions have changed. An owner occupied home is and has always bin a depreciating asset. A liability on the balance sheet. A running wheel for gerbils that goes nowhere fast.
Without banking price supports always ratcheting prices higher moving retirement farther and farther out of reach with each click, the reality sinks in quite quickly; there has to be a better way!! We have the opportunity of a life time to do something good for our grand children. Get the banks out of the mortgage business. At the very least hobble them.
Restore the free market and let prices in the housing market float at the cash equilibrium price. Make home ownership; real home ownership. This single act will do more to help people escape the slavery that is renting from a Lord. Renting from a bank may be a tad cheaper, but putting everyone on tread mills just doesn’t cut mustard in a free society.
This blessing that the banking industry considers a crisis has been a real eye opener to many. It has been a chance to see what a house is really worth without banking price supports. Just imagine all the money you could save for things like retirement without a house payment all those years.
Sure houses would depreciate due to functional obsolesce and could no longer be useful as piggy banks. On the bright side people that can afford new houses would have the latest floor plans and amenities. People that cannot afford to buy new can buy the older homes at an affordable depreciating price making affordable housing available once again to the masses.
The hell with sub prime lending at obscene price supported levels. The hell with 30 year tread mills to nowhere for over priced homes. The hell with “investments” that cost more then you will ever recoup and the propaganda necessary to cover that fact up. The hell with indentured slavery all together. Freedom is a choice. Once price supports are reinstated, I doubt you will get another chance at freedom in your life time or your grand children’s lifetime for that matter.
God Bless.
From reading these posts, it should be obvious that the saying "there are two sides to every story" is certainly true.....bottom line, home ownership is right for some people, but not for others, accept that as well as the decisions of those who do or don't own a home. My wife and I bought a home after our marriage, made extra principal payments each month, deducted mortgage interest and RE taxes (as well as other things because we were above the standard deduction already), and paid off the home early (we also didn't buy more than we needed). We both came out of apartment environments, and having had to deal with obnoxious neighbors, appreciated the privacy of the home environment. But that's us, not everyone, and I respect that. P.S., we now have a lot of equity to use when (if?) we retire and want to build a home out in the country, on a lake, and go fishing whenever we want, but again, that's just us.
Home ownership will always be the primary American dream. Nothing will ever change that. And, renting is much more likely to give you neighbors who are a big problem to you with loud, rowdy and/or uncaring behavior, and who are also far less concerned with property upkeep than are owner-occupants. That is the real truth no matter any opposing arguments in favor of renting.
DATA PROVIDERS
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Japanese stock price data provided by Nomura Research Institute Ltd.; quotes delayed 20 minutes. Canadian fund data provided by CANNEX Financial Exchanges Ltd.
TOOLS
How much house can I afford?Lenders look at your income, debt and other factors
- Monthly payment & amortization table
- How much home equity can I borrow?
- Should I refinance?
- Is it better to rent or buy?
SMART SPENDING
Money lessons are where you find them. Use these tips to live long and prosper.
