“Owning a house remains central to Americans’ sense of well-being,” write David Streitfeld and Megan Thee-Brenan for The New York Times, “even as many doubt their home is a good investment after a punishing recession.”
The NYT and CBS teamed up to poll about a thousand folks and determined that 9 of 10 Americans believe home ownership is a part of the American dream. More of those polled think the government should help homeowners in distress even more than the unemployed.
Who’s to blame for the housing crash? “Only a handful of respondents at either moment [2008 or now] blamed the borrowers themselves for taking loans they could not afford,” write Streitfeld and Thee-Brenan. And while those polled in ’08 thought the regulators caused the crash, now more people think it was the lenders.
“I believe the financial institutions willingly and knowingly allowed people to apply and receive credit at a rate higher than they could afford and this has degraded our economy,” said Steven Goode, an environmental health manager in Las Vegas, told the NYT.
However, while those polled told the NYT and CBS that virtually everyone should own a home, “The underlying trend in sales is flat or slightly downwards, but we do not expect a serious further decline,” according to Ian Shepherdson, chief U.S. economist at High Frequency Economics.
With 30-year mortgage rates sporting a 4-handle and home prices at 2003 levels, people should lining up to buy homes and start enjoying a dreamy suburban America. However, while pending home sales were up 8.2% in May, that is after an 11.3% downturn in April.
Reporting on the new home market, CNBC’s Diana Olick reports, “The 319,000 sales pace is 14% higher than the record low set in February, but new home sales are still 77% below their peak in 2005, and 900,000 is considered healthy.”
So while people say home ownership is the path to happiness, fewer people are actually taking the plunge. Murray Rothbard described “demonstrated preference” as the idea that a man’s actual choices in action indicate what he genuinely values. A corollary to demonstrated preference is the recognition that we can never know another’s valuations except as he displays them through his actions.
Once upon a time in America, owning a home was considered to be the best investment a person could make. Now, only 49% of those polled think it’s a safe investment and 45% think buying a home is risky.
“Beyond all these ills, however, a persistent belief endures that the market will eventually improve and housing will regain its traditional importance,” write the Times reporters.
“But I don’t think I’m throwing my money away,” Donna Boyd told the NYT. “I rented for years when I was younger, and I just don’t like the idea of putting money in someone else’s pocket for something I will never own.”
One wonders if Ms. Boyd is annoyed by putting money in the grocer’s pocket instead of owning her own farm.
Robert Shiller, co-founder of the S&P/Case-Shiller housing index says he wouldn’t be surprised if property values fell another 10% to 25% over the next five years. If he’s right, actions will continue to speak louder than words.
{ 14 comments }
If progress causes prices to fall and this is regarded as a good thing then why does the public hail a continual increase in the housing prices?
It’s _good_ if what you want to buy [especially non-durable goods] fall in price because you can buy MOAR. It’s _bad_ if what you have [especially durable goods like real estate] falls in price because you will be able to sell for LESS: Your balance sheet needs readjusting. This is especially irksome if your liabilities [i.e. mortgages] stay the same or go up.
This is only bad if you don’t fully own your house but you are struck with debt on your house and then the market price falls below your mortgage.
But if your house is fully paid and you enjoy living in it, who cares if it falls. Your house cannot fall to zero unless it’s hit by natural disaster, on the other hand history has showed us that currency falls to zero from time to time. Weimar, Zimbabwe and pretty soon USA. So a house is a good hedge against inflation if you want to get to keep some of your wealth.
But you are just looking on owner side. If you are a first time buyer, you are happy that housing prices are falling, this makes it cheaper for you to buy.
What I value the most is solvency, therefore I would not mortgage myself to buy a house, I would wait to have enough money to pay for it cash.
But, given that you are not the absolute owner of your house and your land, that you have to pay property taxes independent of your income and that the government can for any reason, even for no reason, come and seize your property anytime is what’s deterring me the most from proprietorship.
The government cannot seize a rent since it’s not your property.
If I buy property, I want it to be my complete property, not the government’s and I want to have the right to keep government goons off my property. If not then it should not be considered property and paying money to “buy” a property that is not your property is very risky.
If it belongs to the government, then I refuse to buy it.
“Beyond all these ills, however, a persistent belief endures that the market will eventually improve and housing will regain its traditional importance,” write the Times reporters.
N.B., “traditional importance” only to refers to a very short period of time in the recent past.
You never really own your house. After 30 years of the bank owning it, you start to pay rent to the State. They just call it property tax.
So, it does not make sense to pay a huge amount of money to buy real estate that was never yours in the first place.
If I cannot keep the government off my property, then It should not be called property.
The price you pay for the house is just like a taxi medallion, this is not genuine property. That’s why I will not buy property.
“So while people say home ownership is the path to happiness, fewer people are actually taking the plunge. Murray Rothbard described “demonstrated preference” as the idea that a man’s actual choices in action indicate what he genuinely values. A corollary to demonstrated preference is the recognition that we can never know another’s valuations except as he displays them through his actions.”
But what if the person absolutely wants a house but is super duper poor ?
How can you say that person doesn’t prefer and value having a house ?
Wouldn’t it first require that the person have enough wealth to purchase a house but finally decide not to ? If the person is too poor to buy a house, it’s cruel and flawed to say that he prefers not to have one.
The reality of America is that most people are too poor to buy houses, even with the battered down prices and rock bottom interest rates. People are indebted, unemployed, underemployed and have no savings. Those people would prefer to live in a house but they can’t buy one and they can’t take a mortgage, they can’t afford it.
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housing? what?
Reporting on the new home market, CNBC’s Diana Olick reports, “The 319,000 sales pace is 14% higher than the record low set in February, but new home sales are still 77% below their peak in 2005, and 900,000 is considered healthy.”
Only a handful of respondents at either moment [2008 or now] blamed the borrowers themselves for taking loans they could not afford
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