The latest housing news is pretty grim: existing home sales fell 27.2 percent in July from the previous month to 3.3 million, the lowest in more than a decade. We’re definitely seeing the expected drop-off coming off the end of the home buyer tax credit.
Most of us saw this coming. The very point of the home buyer tax credit was to pump life into the market and entice buyers to move off the fence. Take it away and you’re merely peeling back the covers from the real situation, showing that many potential buyers are tepid, scared of losing their jobs, optimistic that prices will come down just a little more, or simply not able to get a loan.
Amid this news, the New York Times featured a story saying that housing is no longer considered a means to build wealth.
But that’s where I need to stop and think.
There’s no getting around the fact that the market is slow and expected to be slow through the end of the year. True.
And there’s no question that flipping houses is not the part-time moneymaking hobby it once was during boom years. Very true.
But to swear off real estate as a means to build wealth is a bit dramatic. It’s true that in most cases, a buyer cannot look at a house solely as a monetary investment. It’s simply not that – it’s more. It’s a roof over your head. It’s the place where your children grow from toddlers to young adults. It’s where you spend your days and nights living your life.
A home is shelter, but it’s also ownership. Last I checked, you can’t really put a price on the kind of pride that comes with homeownership. Ask anyone whether it’s a dream of theirs to own a home and you’ll likely hear a resounding “yes.”
Again, it’s the intangibles of real estate that will keep this market alive.
A home is not a casino slot machine. It’s not a mutual fund. But it is a relatively safe way to spend your monthly housing budget. In the long-term, homes will still return value to their owners – and while it may not be in the form of doubling your returns, it is a true asset, a thing that you own free and clear after the mortgage is paid.
At the end of the loan, it’s still yours, not the landlord’s or the bank’s. Yours.
So even amid a declining market while analysts and pundits decry real estate a non-wealth builder, a dead end, myself and 60 million+ other homeowners disagree. We decided to put our money into our homes and are proud of it. I don’t think that sentiment is going to change overnight.