A cynic is someone who knows the price of everything and the value of nothing.
Oscar Wilde
The great recession has caused a once housing obsessed country to lose its appetite for real estate. Its no coincidence that the tidal wave of house flipping reality TV shows has retreated to late night televisions infomercial nether regions. Homeowners everywhere are feeling the pain that the personal guarantee can inflict. Prices have gone down, interest only mortgage balances have remained intact. Ouch. The blogosphere and talking head commentators have taken notice. Investment expert James Altucher recently penned an interesting article on his blog titled: Why I am Never Going to Own Another Home Again.
No doubt Altuchers unapologetic attack on the white picket fence dream is compelling. Its true, homes are often money pits requiring unforseen maintenance. Theyre a constant drag on time. Owning a home severely limits mobility. Purchasing a home requires a large down payment and the value of the asset often represents too large of a piece of the homeowners overall portfolio. Then there are the closing costs and taxes. Plus homes are illiquid. I get it and dont entirely disagree with Altuchers arguments. There is no denying the fact that there is a new paradigm governing mortgage lending and home ownership. Things should and will change.
However, ownership counts for something. In fact, ownership counts for a lot. We dont wash and wax rental cars, we dont put granite counter tops in rental apartments. Ownership inspires excellence. As cliche as it sounds, the idea of America has worked because the middle class has traditionally had an ownership stake in the country. As that stake begins to wane, so too our country.
Despite economic obstacles, Americans still aspire towards excellence. They view ownership and success as inextricably linked. While this attitude prevails, the American dream of home ownership will remain intact. Altucher cites home ownership as a source of tremendous stress, a constant psychological drag. That may be true in a down market, but for many, the real source of unease stems from living above their means. When the mortgage is no longer an insurmountable hurdle, the American home is a place to celebrate, rest and grow, not a depreciating money pit.
While we can no longer recommend that people buy homes they cant afford, we must not overlook the value of ownership itself.
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