Home Ownership in America

No surprise, today the S&P Case-Shiller home-price index showed that nationally home values continue to decline.  NPR's Marketplace also had this report:

In it, they report the following:

• On average, nationally prices are back to late 2002 levels
• Gains made from 2002 to 2006 have been lost
• Declines are not over
• Foreclosures will continue and will hit all elements of the market (prime and sub-prime)
• Job losses will make it worse
• Going forward, the "go-go" days are over; even when home sales turn around we can't acount on the gain in home values like we used to 

The last bullet point is what I wanted to focus on because it relates to what I hear people say all the time, and I am sure you have too: "Prices are low, its a great time to buy."  I have long advised friends to NOT ignore the non-financial aspects of their decision.  While it could be a great investment, you are making a major purchase that comes with significan lifestyle changes.  For example, buying a house roots you into a community and makes you less mobile.  In April, I read the articles listed below from the economist that speak to the bigger picture of home-ownership and how govenments play such a big role in pushing home buying because of the presumed positive social side-effects.  I encourage you to rea them, but here are two quotes that I like:

" ...until the crash in 2008, Americans were coming to see their homes as financial investments rather than as places to live." 

"a dwelling house, as such, contributes nothing to the revenues of its inhabitants.  -Adam Smit"

Shelter, or burden?, The Economist, 4-16-09

Building castles of sand, The Economist, 4-16-09