Has your view of the rewards of home ownership changed? Permanently?
Housing will eventually recover from its great swoon, the New York Times reports. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg, NYT writes.
The wealth generated by housing in those decades did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming, the NYT writes.
More than likely, that era is gone for good, the NYT says.
“There is no iron law that real estate must appreciate,” Stan Humphries, chief economist for the real estate site Zillow, told the NYT. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”
Instead, Humphries and other economists say, housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.
Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up, the NYT says.
With that in mind, what is your game plan?
Sell when you can? Stay put?
Buy when you get a chance, especially at these depressed prices? Buy, but spend less than you would have before the housing crisis?
Rent? Now or forever more?
Is your home worth less than the mortgage amount? Think it will get back to that level over time? How long? Plan to bail out before that?
For instant updates, follow me on Twitter.