Home Value Update – 4th Quarter 2009
If all we did was listen to the news, our picture or perception of the housing market would be pretty grim. In fact, most people do perceive it that way. Yet viewing housing over the longer term tells a different story, especially if we measure the performance of housing against a few other popular benchmarks.
For instance, if we look at the major stock market indices, an investment over the last 5 or 10 years has you in the hole right now. Conversely, there are only 6 states in which the same can be said for the housing market. In the remainder, values are up from fractionally, all the way to almost 37% over the previous five years.
To those that understand that those are simply nominal returns not further enhanced as they are typically by both tax advantage and leverage, the comparisons to the alternative market barometers are well to the extremely advantageous.
So while all we seem to hear on the news is how housing is down and stocks are up, it’s best to give yourself and your clients the benefit of proper perspective. Especially now that the day trading of homes is largely passe’, it’s time to take stock of what has FOR the responsible also BEEN responsible for the uptick in their net worth over the last 5 or 10 years.
The question you want to pose is that stocks have already risen significantly from the bottom, housing has not and therefore, which would you consider the best investment for the next 5 or 10 years? It takes guts and foresight to make tough decisions and to do things that the crowds are not. Yet at the end of the day, housing is something we all need. If ownership over time trumps renting and if ownership over time also makes for sound investment, that’s a pretty tough combination to beat.