Yesterday there was an article in the Wall Street Journal that outlined 10 Reasons To Buy a Home – I personally disagreed with many of the points outlined, which is not a surprise for those who read my polarizing Renter’s Manifesto.
While we are all entitled to our own opinion, I am going to take issue with the article’s intro, which states a “contrarian case” for home ownership:
Enough with the doom and gloom about homeownership.
Sure, maybe there’s more pain to come in the housing market. But when Time magazine starts running covers that declare “Owning a home may no longer make economic sense,” it’s time to say: Enough is enough. This is what “capitulation” looks like. Everyone has given up.
But it’s not enough just to be contrarian.
On cue, a survey from Fannie Mae that shows Americans actually believe the housing market is near a major bottom:
Fannie Mae (FNMA.OB), the largest U.S. mortgage funding company, said its latest nationwide survey showed that most Americans believed the housing market had reached bottom, yet they are more cautious about owning a home.
Fannie Mae said 70 percent of respondents think it is a good time to buy a house, compared with 64 percent in a similar survey conducted in January 2010.
However, 33 percent — up from 30 percent — of all respondents said they would be more likely to rent their next home if they were to move.
About 67 percent of Americans continue to believe that housing is a safe investment, Fannie Mae said.
Of course a Fannie Mae sponsored survey would come out bullish for housing – but this does jive with my personal experience amongst Northern California home buyers, at least. The prevailing belief appears to be that while go-go appreciation in housing is likely many years away, the downside is also limited from this point.
With respect to the local housing market here in NorCal, I disagree – I see a lot of potential downside danger. Rates are at historic lows, unemployment is north of 10%, and prices are still at relatively elevated levels with respect to income around here.
What’s your experience in your local area? Do you see opportunity in housing near you?