WSJ article on the American myth of homes as investments
http://online.wsj.com/article/SB124336746233955539.html
Glad to see that busting this mythology is starting to get some serious press.
Glad to see that busting this mythology is starting to get some serious press.
What I mean is that when you go to Vegas, if you gamble, you put a certain amount of money aside and say "if I lose this, it's ok." In Vegas, you probably will lose it, so that amount shouldn't be high.
With investing, the odds are better. If you invest in good companies, you are way more likely to win than if you play blackjack. :) And historically, real estate is an even better bet. But it's still a bet, and there are times when that bet is not going to pay off. Now is one of those times. But just as in Vegas, there are reasons to bet beyond the simple financial ones. In Vegas, it's about entertainment -- playing blackjack can be *fun*. With investing in companies, it can be about feeling like you're a part of a company whose mission and tactics you believe in. And with real estate, it's about all the advantages I mentioned.
My point? I agree with you that, like most other investments at this economic moment, real estate ain't a particularly great one. But that doesn't mean you should be judgemental about people who do choose to buy a home. (And yeah, you come off as a little judgemental.) There are lots of reasons beyond the simple economics.
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That's meant to be just an entertaining quote. I invest, usually profitably, and I don't gamble.
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* I am SURE I come across as judgmental, since I ABSOLUTELY am judgmental on this topic! I organize local housing bubble meetings, and I definitely have opinions here. My own feeling is that it's a personal LJ, and if you think I'm full of it, you can bucketize my thoughts into the crap pile of other garbage on the web.
* My own experience is lots of people make decisions ruling out the "simple economics" -- for certain decisions -- will cause many people to regret it later. (e.g. buying an SUV was really fun until gas hit $5/gallon, just like a home on an ARM might sound nice until the not-unimaginable need to somehow re-fi at ~10% interest w/~30-40% less equity in 5 years which will I imagine will send many present ARM-holders into foreclosure)
And I have a dear family member who I love who bought a $750K home in NYC before her first child saying it wasn't about the money -- but now that she wants to move to Florida in 3-5 years, will she still feel that way if she has to sell it at a $250,000 loss? --- whether she was able to remodel it the way she wanted or not. etc.
Anyway, happy to discuss this further in person. Not typing at length.
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