Housing is responsible for 25% of Gross Domestic Product - can you see the government coming out and saying, "Hey, buy a house...it's good for the economy."
Of course not - which is why they don't
"What do we do?" - is what some bright guys sitting around a table ask.
"Hey, I know," - exclaims a really bright guy, "let's call it the American Dream of Homeownership? We'll make it seem like you have only 'made it' once you buy a house. Heck, someday people will buy bottles of water. They'll eat this up like candy. "
I have to applaud the government - and the entire industry. The American Dream promotion has been one of the best marketing campaigns of all time. My background is marketing. I have to doff the cap to whomever came up with this gem of propoganda.
The home you live in - is NOT an investment. This was a hard point for me to get across in the days of staggering appreciation...but I was saying it. "No, housing keeps going up...it's an investment," was what I would hear.
Of course, how many people - sold the house they lived in when the market was up....and then sold and rented? Nobody! OK...maybe a few did but they "lucked" into it. Maybe a divorce at the peak of the market forced them to sell and they didn't purchase again. Few people were willing to go back to renting and trade in and out of their own house like you would a stock.
It's a lot easier to say it now - as, depending where you are, you have seen the value of your home drop by 20-35% (or more) over the last three years.
In the Big Tomato (that's Sacramento for those of you out of the know) - we are coming up on three years. The peek of the market hit at the end of June 2005. The foreclosures started hitting the market toward the end of the first quarter of 2006.
"What is a house? Is it a bad thing?" - of course not. I am bullish on homeownership. If you can afford one and you plan to be there for 5 years, get in. Sure, values could drop a bit more but it's hard to buy at the bottom. When the rebound hits, it hits quick and you end up being lucky to buy at the levels today. You still have some time but I would be out there ready to go......NOW.
A House is A FORCED SAVINGS ACCOUNT - if it appreciates, that is the interest you get. Yes, you get a tax deduction. Do the comparison to rent and factor taxes in and owning actually could save you in monthly payment right now. Of course, you are going to spend money on other things that you "just have to have" in your house (hence the Home Depot picture).
A House is a Home....- or it can be. That's your job. This is the emotional factor of the equation that I can't advise you on. For me, it's a place to keep my stuff**.
My job - is to set the emotion aside.
**....and a place to grow my stuff at Nutster Farms
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