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No_Such_Reality_IHB

No_Such_Reality_IHB

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The other night, I guess I saw one too many NAR commercials touting the investment returns of owning. Statements, with no financial risk disclosure like, on average homes double every ten years. Etc.

Here's their website http://housingmarketfacts.com/

IMHO, the NAR really needs some SEC style oversight. The main info box is a fairly blatant investment tout virtually promising great returns. Double in ten years. 94% return on your down payment in three years. 6% annually. Argh.

OMG, click the link for their "Equity Estimator". What a joke.
 
Such a joke. . .

"Over the past 30 years, home values have risen over 6 percent annually". . .sounds great except that stocks average a return of 6.6 percent to 16.5 percent over a ten year period and 7.8 to 14.7 percent over a 20 year period. Also, the S&P 500 has a historical annual rate of return of 11.5 percent (including dividends).

(http://money.cnn.com/2006/12/22/commentary/sivy/sivy.moneymag/index.htm (using the article for statstic purposes, the opinion is classic 2006.)

The comparison between renters and homeowners are also a crock because homeowners tend to be older in age than renters and have dual incomes. It is true that college students have less net worth than middle aged people but so what.

60 percent of a homeowner's net worth is their home equity means that 60 percent of your net worth is locked into a house and you have to pay someone else 8 percent interest to use it. Sounds good to me.

Typical NAR.
 
the comparison of renters vs homeowners assumes correlation and causal effect are the same thing. that's why i think it's wrong when they promote the idea of home ownership as some sort of symbol of wealth. people end up falsely believing that you need to buy a home to live the american dream. its the other way around -- you need to live the american dream (working hard, having success) so you can buy a home.
 
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