For the first time in years, Americans are seeing their homes as investments.
The American Dream of homeownership—having a place to call your own—may not have dissipated during the housing crisis, but the concept of home-as-investment tumbled just as home prices did.
According to a recent Gallup poll, real estate beats out stocks, bonds, savings accounts and even the Great Recession's investment darling, gold, as the favored form of long-term investment. A full 30 percent of Americans see real estate as the best investment—up from just 19 percent in 2011.
As we all know the media can twist around just about anything to come up with a story in their favor. However we are so short sided and fickle as Americans. It just blows my mind how much of a herd mentality we have in this country. For so many types of investment real estate the utility doesn't change overtime. Yes areas change, grow, or decline...buyers change to renters and vice versa however the core of our investments don't change. However the value can wildly change based on the market's perception of risk. Capital markets have a big impact on prices as well however most of that is fueled by market perception as well.
I read that article last night - it contains a lot of words but doesn't actually say anything new or insightful.
The current environment is different than the 2004-2007 adventures because the lending requirements are (theoretically) more strict and appraisals are more reliable.
When I refinanced last year, the bank sent an appraiser who actually stepped-foot inside my house to look around, take notes, take pictures, etc. I was pleasantly surprised. It's the first time that I have met with an appraiser whom I didn't hire myself. In previous purchases/refinances, I would just get an e-mail or a phone call from an appraiser who did a drive-by (if that).
Though somewhat driven by investor-demand, I believe the current price increases are more-sustainable because there are more factors that make it difficult for buyers to take out a loan on a property they really can't afford, or take out a loan with an LTV greater than 100%.
In essence I believe the people who are driving the current price increases have a better idea of what's going-on and are actually creating the surge, rather than just riding it.
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