Jump to content
House Price Crash Forum
Sign in to follow this  
Eddie_George

A House Is A Home—Not An Investment

Recommended Posts

Five years after the collapse of Lehman Brothers and the onset of the 2008-2009 financial crisis, the U.S. housing market is at last starting to thrive. It has, in fact, been steadily improving over the past years, and that trend has only accelerated of late. Housing is widely perceived as a key ingredient to a healthy economy, and so the revival in the housing market has been heralded as a positive step for an American system that has been sluggish at best. Similar trends in the United Kingdom and parts of the EU are greeted as positives as well.

But is it? Housing is a key aspect of economic activity in most countries, but that doesn’t mean that we should welcome a return to housing as a perceived pillar of national strength. And we should be very wary of any return to an ethos that sees either home ownership or housing prices as a barometer of individual and collective success. Those attitudes very nearly imploded the modern financial system, and they could imperil it again.

Homes are places where you live. They are not — and should never have been — investment vehicles. Yes, homes may gain in value and augment one’s net worth, but the reason to own a home is that it can be a cost-effective way to obtain a place to live. The minute they are seen as investments, that reality gets perverted, with dangerous consequences.

More here

Share this post


Link to post
Share on other sites

The US economy hasn't rebounded. Q3 GDP growth of just 1.6% is expected. Under- and unemployment is at a three decade high.

US housing is in bubble territory again already thanks to QE. Were prices to rise another 10% and mortgage rates a mere 1% then affordability would fall below the 1993-2007 pre-recession average (see chart).

Here's the July, 2013 NAR Affordability Index updated with August's average mortgage rate. Wouldn't take much from here to challenge the all-time low.

http://soberlook.com/2013/09/a-housing-affordability-index-scenario.html

Housing+affordability+index.PNG

Share this post


Link to post
Share on other sites

A positive outcome to emerge from the past five years would be to dispel the notion of a home as primarily an investment, let alone a good one.

Unfortunately during the 80s/90s crash journos were saying just about the exact same words but here the housing market is again. It's like they trawl the old articles and old headlines for stuff.

There is a small positive for those looking for an affordable home in that when journos were saying "dispel the notion of a home as primarily an investment" during the 80s/90s crash it was sufficiently after the peak and on the downhill for it to be starting to be clear that a home as an "investment" wasn't going to be worth it anymore (or at least that's how it seemed at the time) and there was a way to go further downhill still for house prices.

Edited by billybong

Share this post


Link to post
Share on other sites

yes. Time to end all BTL mortgages - we can't do anything about BTL-ers who pay with cash, but there should be no BTL mortgages and all such mortgages should be called in immediatelly, hopefully leading to a massive sell off and HPC.

Share this post


Link to post
Share on other sites

yes. Time to end all BTL mortgages - we can't do anything about BTL-ers who pay with cash, but there should be no BTL mortgages and all such mortgages should be called in immediatelly, hopefully leading to a massive sell off and HPC.

I agree.....100% cash only to buy a property to let out......otherwise create a proper business and have a proper plan and pay proper business rates and taxes like other businesses do. ;)

Edit: Oh, I forgot any business that involves buying property with debt is a low risk business....they can have all the money they want and more.......any other business that has no property that can be given as security is high risk....no money for you...buy property with it and the government will guarantee the lenders possible loss....

Edited by winkie

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   209 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.