Friday, January 15, 2010

Housing as shelter, not investment

If we learned anything from the bubble and crash it should be that your home is your home, first and foremost. It seems clear now that betting on housing prices is risky business and that when you loose, it is more than just your shirt. I am not sure when or how houses became an investment to flip or fund retirements. Hopefully the last decade has demonstrated that your house should be viewed as shelter and treated as such. While this might be a simplistic view, Ed Glaeser agrees:

Americans appropriately cheer when computers and cars get cheaper. We should also see the upside in cheaper homes. Indeed, we should hope that technological improvements in the building industry are passed along to consumers in the form of lower prices.

So stop thinking of your home as an investment that will yield comparable returns to the stock market. Housing is a form of consumption that yields benefits in the form of a more pleasant life, not a bigger balance sheet.

Enjoy your home, the way you should.

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