Jan Rogozinski

When Will the Housing Market Bottom?

One can think of houses in two ways--as a place to live, and as an investment.

(1) Considered as an investment, house prices have a long way down before they stabilize at what they were in 2000 or 2002 or at a lower price than that.

It was all a bubble based on economic reality. After all, the NASDAQ still is way below what it was in 2000 during that other bubble.

(2) The housing market probably is the most imperfect market there is. Unlike stocks or bonds (or ETFs and mutual funds), one cannot sell whenever one wants to.
With financial markets, one can get out when one is down, say 10%. With housing, one usually can't. And the market may never come back to what one paid. Think of Detroit, for example or any other rust belt town, where home values have disappeared.

Since homes are a lousy investment, there must be some psychological and emotional need that is satisfied by real property. I guess it is that one can go and touch the House. But then so can arsonists and termites.

I'm not saying, never buy a house to live in. Americans are so incredibly rude, that living in an apartment or a condo sucks. The more space between one self and one's "neighbors," the better. But the house one lives in is entirely an expense and never a investment. And houses other than the one one lives in are a truly lousy investment.