Buying A Home
Isn't Stupid,
Says NAR
excerpts from
'Realty Times'
by Blanche
Evans, Editor
The National
Association of
Realtors has had
its share of
battles this
year, but none
is more
frustrating than
the national
media telling
homebuyers that
investing in a
home is a stupid
idea.
First, they keep
trying to make
real estate into
a national
market, and then
they treat the
approximately 2
percent loss in
housing prices
for 2007 like
the Crash of
1929.
From the Housing
Bubble to the
Mortgage
Meltdown, the
press has been
relentless, even
though most
people have lost
more money on
their SUV's and
their stock
portfolio than
their homes this
year.
It's time for a
little
perspective
here, folks.
Here are a few
facts that NAR
would like the
media to
remember:
Even though
national housing
prices are
likely to dip
around two
percent this
year, 2007 will
still be the 5th
best housing
year on record.
The East and
West Coast
typically flex
higher and lower
than the middle
of the country,
so it's not
surprising that
when the housing
boom started
back in 2002,
prices
skyrocketed in
California and
Florida, while
going flat in
other places.
Rapid price
gains are
unsustainable,
and will always
overcorrect
before settling
back to normal
rates of
appreciation.
Those believing
that price gains
would go on
forever are the
ones who were
likeliest to get
hurt --
speculators and
homebuyers who
bought beyond
their true
means.
Most
foreclosures and
delinquencies
are concentrated
in the subprime
market, and
those who
qualify for
conventional
financing are
still seeing
extremely
favorable
interest rates.
Homeownership is
not a quick in
and out purchase
like stocks.
Wealth is built
over the long
term, which is
one reason why
home buying is
heavily
subsidized by
tax savings and
generous loan
programs that
enable people to
get into homes
without large
down payments.
Stocks and
houses aren't
the same. Over
10 years, a
$10,000
investment in
the stock market
at a normal 10
percent market
rate of return
would yield
nearly $24,000.
The same
investment as a
down payment on
a $200,000 home
at a normal
appreciation
rate of 5
percent would
return nearly 5
times the stock
market return,
or over
$110,000.
While some
markets have
reported major
losses in home
values, they
also have
extenuating
circumstances
such as major
job loss as is
the case in
Detroit, or over
speculation, as
in parts of
Florida. For
many
communities,
home values are
going up, not
down.
