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.