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July 5, 2005
Report says, Benefits of owning a home are declining
A recent article states that "Easy money and low inflation have combined to undermine the value of buying a house with a fixed rate mortgage, a conclusion that may surprise home buyers who rapidly have been bidding up house prices in recent years." This after a new report stated that the financial advantages of buying a home are the lowest since they have been since 1970. There are many economists who are wondering if house prices have climbed too fast and are ready for a fall. The report doesn't specifically target the rising of falling prices of the house itself, but is focused on the financial risks of owning a home on an interest only loan or with a zero down payment. The article points out that homes as a sure-fire investment may be waning.
The article also points out the up and downside to low inflation rates. This in the fact that with high inflation the "real" value of money helps out home buyers because the money they are paying back the lone with is worth less than the money they had originally purchased with.
It may not be the best idea to purchase more house than is neccesarry, the article states, as a way to invest. Roger Harrington stated that "If you want a risk-free investment, put the (extra) money into an FDIC-insured account where you can be assured of the return of your principal."-
Comments
I sure this is incorrect! I would hate to think that everything I have put into keeping my house updated and maintained, that it is in fact losing money. Also, having refinanced more than once, I need the value to continue to rise so that someday, hopefully, I will have earned from this investment.
Posted by: Debbie at July 8, 2005 5:09 PM