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Housing Fades as a Means to Build Wealth, Analysts Say

 
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samz



Joined: 19 Feb 2008
Posts: 102
Location: Medford, MA

PostPosted: Mon Aug 23, 2010 12:12 pm GMT    Post subject: Housing Fades as a Means to Build Wealth, Analysts Say Reply with quote

From NYTimes today:

Title: Housing Fades as a Means to Build Wealth, Analysts Say
Link: http://www.nytimes.com/2010/08/23/business/economy/23decline.html
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admin
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Joined: 14 Jul 2005
Posts: 1794
Location: Greater Boston

PostPosted: Mon Aug 23, 2010 1:54 pm GMT    Post subject: Reply with quote

In agreement with the article, my current hypothesis is that real estate, stocks, and bonds have all done well over the last thirty years because of falling interest rates and money illusion. Not low interest rates, but falling rates. With not much room left to fall further and inflation too low to offer the same illusion, I'm not expecting a repeat of the last 30 years.

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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon Aug 23, 2010 7:49 pm GMT    Post subject: Reply with quote

The person who paints my wife's toenails understood the content of this article two years ago. I don't understand the newsflash....

This was a good takeaway however:

Quote:
By the late 1990s, however, the rate was 4 percent a year. Happy homeowners were taking about $100 billion a year out of their houses, which paid for a lot of good times.
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admin
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Joined: 14 Jul 2005
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Location: Greater Boston

PostPosted: Mon Aug 23, 2010 8:19 pm GMT    Post subject: Reply with quote

john p wrote:
The person who paints my wife's toenails understood the content of this article two years ago. I don't understand the newsflash....


Then your wife's manicurist is way ahead of the rest of the population. Shiller's survey from less than a year ago showed that the typical expectation is that housing will appreciate at 11% annually over the long term. It still hasn't sunk in for most of the population.

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admin
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Joined: 14 Jul 2005
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Location: Greater Boston

PostPosted: Mon Aug 23, 2010 9:36 pm GMT    Post subject: Reply with quote

In fact, that same survey was just updated and the update was mentioned in the NY Times article. Now people expect long term appreciation to be 10% instead of 11%. That's still delusional (at least with current inflation expectations).

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