Wednesday, July 31, 2013

My letter to the WSJ re: Why do we celebrate when housing costs rise?

Housing Prices Jump, But Headwinds Build

This Wall Street Journal article is typical of many in that it celebrates the rise in home prices. Yet no one is happy if other costs of living increase, such as food, energy, clothing, autos, and education. But everyone seems to want the cost of housing to increase, which hurts low income and first time home buyers. If you already own a home and its value increases, you just have to pay higher property taxes, higher home insurance premiums, and higher maintenance costs. And if you move, the cost of your new home will be higher, wiping out any supposed "profits". Considering your home an investment makes no sense. It is occupancy expense, and we should celebrate when its costs drop, just like any other cost of living.

1 comment:

  1. Sir,

    Your are of course correct, with a caveat. Those who make a career of investing in property and speculate prudently can make a nice living: Provided they are investors, not mere speculators, with big dreams, with sufficient equity positions it their properties. Ending the Fed would drive all the speculators out of the real-estate market and prices would stabilize. Not that speculators drive up prices they merely expose old Ben as the naked fool that he is.

    Ed Sr.