Robert Shiller, Yale economist who warned of the housing bubble before it burst, offers some sober thoughts on home prices. Here is a direct link.
Follow
____________________________
Robert Shiller, Yale economist who warned of the housing bubble before it burst, offers some sober thoughts on home prices. Here is a direct link.
;
That’s the key, is’t it? A house is a shelter. After you factor in all the repairs, improvements, insurances, taxes, it is not a very good investment.
Again. Thank you both for sharing the charts and thoughts. Lanley, B.C.
All depend on THE PRICE and the location you purchase your home. It’s a great investment if bought it many years ago say in the 90s and you pay off mortgage and debt free.
To compare these two scenarios:
1) You purchased a house in the 90s for $100,00. Now with the housing crisis, your house still worth $230,000 (off from the peak the bubble of 2006 $400,000.) You paid it and only paying property tax $1250/yr and maintenance $300/mo. If you sale your house, you will have $230,000 back.
2) You didn’t buy but pay rent. For 25 year you paid over $150,000 and more to the landlord. You can’t get your rent money back and have no assets left. Rent keeps going up and up each year. The landlord can kick you out if you are disliked.
The point is all about PRICING.
The price of a house is about 35 to 40% of household income divided by the mortgage rate. (People pay as much as they can afford.) Change any of these variables and the price of housing changes. The long run of declining interest rates has meant rising house prices, but how lucky do you feel about future interest rates punk?