![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
Darren C. Pollock is an equity analyst at Cheviot Value Management, Inc., (www.cheviotvalue.com) a money management firm in Santa Monica, California.
"Buying a home, if the price is right, is often the best investment most people could make. However, the recent spectacular rise in home prices may turn today’s home purchase into a speculation that will engender eventual losses.
National home prices, adjusted for inflation, have appreciated about 40% since 1995 and many areas are up more than 160% in that same time. “If you go back to the 1980s, during that cycle, adjusted for inflation, total price appreciation was 18%. In the prior boom in the 1970s, it was 15%,” cites David Stiff, an analyst with esteemed real estate research firm Fiserv CSW. He continues, “It’s alarming… I am surprised that it’s that high.”[i]"
http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=42667
The good news? The article ends with this:
"It is important to note that individuals will avoid adverse effects of a sizable downturn in home prices if they have no need or desire to sell, can afford their mortgage payments in any event and do not increase their debt by using their home equity to borrow for consumption purposes. We are not as optimistic for homeowners who are over-leveraged or for the many speculators in the housing market."
I still think letting out-of-state financial institutions convince Texans that they should be allowed to use the equity in their homes to pay off bills was the worst decision made in Texas in a generation. And many will lose their homes over it.
"Buying a home, if the price is right, is often the best investment most people could make. However, the recent spectacular rise in home prices may turn today’s home purchase into a speculation that will engender eventual losses.
National home prices, adjusted for inflation, have appreciated about 40% since 1995 and many areas are up more than 160% in that same time. “If you go back to the 1980s, during that cycle, adjusted for inflation, total price appreciation was 18%. In the prior boom in the 1970s, it was 15%,” cites David Stiff, an analyst with esteemed real estate research firm Fiserv CSW. He continues, “It’s alarming… I am surprised that it’s that high.”[i]"
http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=42667
The good news? The article ends with this:
"It is important to note that individuals will avoid adverse effects of a sizable downturn in home prices if they have no need or desire to sell, can afford their mortgage payments in any event and do not increase their debt by using their home equity to borrow for consumption purposes. We are not as optimistic for homeowners who are over-leveraged or for the many speculators in the housing market."
I still think letting out-of-state financial institutions convince Texans that they should be allowed to use the equity in their homes to pay off bills was the worst decision made in Texas in a generation. And many will lose their homes over it.
