There’s always something to howl about

What’s the long term investment value of owning your own home? Would you believe… nothing?

Business Insider has the goods.

Yes, I know you can tell me stories about killings made. We’ve done it, too. How are your results lately?

Meanwhile, do you want to have a long talk with all those folks who bought their homes believing in the wealth-producing miracle of the mortgage-interest tax deduction?

Does anyone want to chip in for some wood polish for the NAR’s nose?


11 Comments so far

  1. Jim Klein May 11th, 2011 10:24 am

    I’m sure this is obvious here, but without the value of the shelter afforded, those rates are worthless to an individual homeowner with regard to whether it’s wiser to purchase a home or buy stocks.

    The conclusion is just as obviously true—effectively all production is cognitive.

  2. Greg Swann May 11th, 2011 11:10 am

    Check. And, in housing’s defense, a residence will not lose value in the same way that other consumable durable assets will. Rare is the car that will hold its value, and don’t waste time looking for profits from your used clothing or shoes.

  3. Jim Klein May 11th, 2011 12:18 pm

    Hey, my crib’s been losing (market) value even faster than my wheels. That’s how it goes in an upside-down world. What we don’t know is what happens when it gets jolted right-side up.

  4. Dave Mills May 11th, 2011 12:43 pm

    OOps I see short sightedness cropping up again. If you truely believe your home is valueless as something to own, come on over & rent from me. I have 10 houses and all are worth more today than what I paid for them. People need to look long term, not next month or next year, and purchase something that is likely to retain value, rather than something with a lot of square feet built by quickie builders. My cars have generally gone up in value too, but that varies more than houses. My 1932 Ford coupe is worth a lot more than I paid for it, but my 1957 VW has not fared so well, and the Honda I drive daily has dropped predictably as it is not that old. In short, watch what you buy and don’t plan for instant outlandish profits and you’ll do fine. If you do not believe that, I don’t see how you can represent people in real estate.

  5. Greg Swann May 11th, 2011 2:05 pm

    > If you do not believe that, I don’t see how you can represent people in real estate.

    Beliefs held contrary to facts are better qualifications for a clergyman, I would think. Reread the article — as many times as you need to to apprehend the facts of residential real estate. Of, if that’s too much of a burden, you could found the Church of NAR.

  6. Artur May 11th, 2011 12:57 pm

    Real estate can be a wealth building vehicle, just not the one you live in.

  7. Thomas Johnson May 12th, 2011 9:29 am

    Residential rental real estate can return double or triple “risk free” rates that US Treasuries yield. Stuff that real estate into a self directed tax deferred retirement account and you insulate the income from the IRS, index the cash flow to inflation and protect the principal from creditors. The media shills for the Wall St. banksters will not tell you that. They want your money in a fee producing mutual fund so they can spin your money to generate annual Maybach purchases for their concubines.

  8. Sean Purcell May 12th, 2011 3:58 pm

    Interesting… I don’t quibble with the math, but I’d like to see a lot more info/backing on this key assumption:
    the real rate of return of the national house-price index between 1975 and 2009 (is) 1.3%

    Where is this number coming from? I assume it’s inflation adjusted? What if we change the dates being viewed?

    You get the idea…

  9. Jim Klein May 13th, 2011 8:26 am

    I think Artur has it spot-on and Dave’s story is evidence for that.

  10. Greg Swann May 13th, 2011 8:34 am

    To successfully conflate residential with commercial real estate, all you need to do is this: Pay yourself the full rental value of your home. Use those funds to pay the home’s mortgage and expenses, then invest the remainder. You might say, “But that’s double-think!” So is conflating unlike things.

  11. Michael Cook May 13th, 2011 1:40 pm


    In a rare moment of clarity, I agree with you here. Its very hard to compare the home you live in to an investment because you simply dont make the same decisions as you would a typical investment property. As the article suggests you are not always thinking buy/low and sell high. Often times, its buy/sell when I get relocated or have some other major family event.

    That being said, given most American’s penchant for spending over saving, owning a home at least provides them a forced way to save. Banks tightening lending standards will keep it that way in the near future.