Excerpt from the article below; "the most striking part of the current situation may be that despite everything that has happened in the last few years, there are still places where renting does not get enough respect."
Link to NYT article, "In Sour Home Market, Buying Often Beats Renting"
Click below to help determine if your regional housing market is still a bubble:
Link to rent ratios in different cities
Link to graphs of inflation adjusted historical home prices (nationally and by major metro areas)
Saturday, April 24, 2010
Friday, April 16, 2010
7 out of 10 still believe a home is one of the safest ways to invest
Excerpt from "It's a home, not an ATM," Washington Post, Sunday, 11 April 2010
"Homeownership in this country has climbed for decades, with the rate peaking in 2004 at 69.2%, according to data pulled together by the Hoover Institution at Stanford University. Homeownership jumped significantly from 1940 to 1960, increasing from 43.6% to 61.9%. As the number of homeowners increased, so did the belief, fueled by lenders and others working in the mortgage industry, that a home was a savings account. We were enticed by lenders to tap into our equity, secure in the belief that a house would always increase in value. The financial wisdom we came to embrace was that draining our home equity was a risk-free deal. People were counseled for decades to get a home loan for the mortgage-interest deduction; however, the mortgage deduction was never intended to promote homeownership. Ultimately, the mortgage deduction promoted overinvestment in residential real estate. We made renting seem so financially reckless that it surely encouraged people to jump into buying a home before they were ready. The Fannie Mae National Housing Survey, conducted in December 2009, polled people with home loans and renters to gauge their feelings about the current state of homeownership. The poll found that 7 out of 10 respondents said buying a home is still one the safest ways to invest."
Readers, please look again at the graph provided in SmartSheepInvestor's 6 February post. (graph link) Bottom line, a home is not one of the safest investments.
"Homeownership in this country has climbed for decades, with the rate peaking in 2004 at 69.2%, according to data pulled together by the Hoover Institution at Stanford University. Homeownership jumped significantly from 1940 to 1960, increasing from 43.6% to 61.9%. As the number of homeowners increased, so did the belief, fueled by lenders and others working in the mortgage industry, that a home was a savings account. We were enticed by lenders to tap into our equity, secure in the belief that a house would always increase in value. The financial wisdom we came to embrace was that draining our home equity was a risk-free deal. People were counseled for decades to get a home loan for the mortgage-interest deduction; however, the mortgage deduction was never intended to promote homeownership. Ultimately, the mortgage deduction promoted overinvestment in residential real estate. We made renting seem so financially reckless that it surely encouraged people to jump into buying a home before they were ready. The Fannie Mae National Housing Survey, conducted in December 2009, polled people with home loans and renters to gauge their feelings about the current state of homeownership. The poll found that 7 out of 10 respondents said buying a home is still one the safest ways to invest."
Readers, please look again at the graph provided in SmartSheepInvestor's 6 February post. (graph link) Bottom line, a home is not one of the safest investments.
The SEC's Case Against Goldman Sachs, Explained
The SEC says Goldman Sachs defrauded investors in a CDO. CDO's are those complicated bonds that lost huge amounts of value when the housing market went bust. Copy/paste the link below for an explanation of the case:
http://www.npr.org/blogs/money/2010/04/sec_accuses_goldman_sachs_of_f.html?ft=1&f=93559255
The investing lesson from this case isn't really a lesson, but rather a reminder. Investment banks such as Goldman do not put their clients' interests first, as they would have you believe. Avoid I-bank engineered/inspired under-performing expensive mutual funds and take back half of your life's work from your fund manager! (see SmartSheepInvestor's January post for a full explanation)
http://www.npr.org/blogs/money/2010/04/sec_accuses_goldman_sachs_of_f.html?ft=1&f=93559255
The investing lesson from this case isn't really a lesson, but rather a reminder. Investment banks such as Goldman do not put their clients' interests first, as they would have you believe. Avoid I-bank engineered/inspired under-performing expensive mutual funds and take back half of your life's work from your fund manager! (see SmartSheepInvestor's January post for a full explanation)
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