Real Estate Values and Home Ownership


Home With Picket Fence We all want to feel warm and fuzzy about home sales and real estate values, which are a large driver of consumer spending.

Real Estate Values

But the jury is still out on how consumers are going to value home ownership after the great housing crash. Will it continue to have it’s lustre or will it be seen as a liability to job mobility? Will it be viewed as a capital drain on the household.

In addition, current demographic trends show flows into the cities and out of the suburbs.

Maybe the housing market isn’t doing as well as we think.

The Wall Street Journal reported on December 1, 2014 (link below) that about 14% of appraisals done between 2011 and 2014 were inflated by 20% or more.

It would appear that realtors and bankers are putting pressure on appraisal firms to help bolster a softening real estate market (and their commissions).

Home Ownership

While middling performance of our real estate assets is a bit troubling, the value of home ownership is just fine. A home unlike real estate, is your sacred personal space and a home is still a home whether it is a mansion, a middle class home, a trailer or a yurt! The security of having a home certainly has great psychic value. It’s just that we have to realize that living in our homes is an expense and the equity built in our house while we own it helps offset some of the expense.

It would be wise to consider the days of flipping real estate are very likely past.

Link to the WSJ article appears below.

Wall Street Journal – Dodgy Home Appraisals

 

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