Is Home Ownership Still a Good Investment?

August 31, 2009

On August 18th, a study commissioned by Bankrate.com found that 92 percent say that a home is a good investment for the future while 48 percent worry about losing or being unable to afford their homes.

With the downturn in real estate markets throughout the economy, it is understandable that almost half of Americans worry about either losing or buying a home. The very next day (August 20th), the Wall Street Journal ran an article entitled, What Has the Housing Crash Cost Americans? (How much real wealth have Americans lost so far in the real estate crash?).  The article quoted a Federal Reserve study in which it is estimated the total market value of U.S. homes fell 18 percent from the end of 2006 ($21.9 trillion to $17.9 trillion or about $13,000 per person). This represents a 40 percent decline in homeowner equity from the peak of the market.   

My guess is that in future surveys we will start to see fewer and fewer Americans believing that home ownership is a good investment and that it will take many years of steady increases in value before we see a consensus change in those beliefs.

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