The Trouble With Homeownership by Robert Shiller

[TJ_98370]

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As professor Shiller is referenced often at this site, this article should be of interest -
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- It's good for the community but not the wisest investment.
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.......But what's ironic, as any classical economist would tell you, is that homeownership is actually not a great idea from an investment standpoint. A better strategy would be to diversify as much as possible—put your money into stocks, bonds, many different geographies—and then use the income to rent whatever you like, which allows for greater flexibility and efficiencies. The popular argument that renting is equivalent to throwing money down the drain is really fallacious, since the money you save can be invested to produce dividends. Instead of you tinkering with the plumbing and breaking something, a professional can do it. The lawn guy who has the right equipment can come and mow all the lawns faster and better than individuals would, and so on......
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[jon]

[TJ_98370]

jon-
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Your interpretation of a statement taken out of context is quite creative.
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[SeattleMoose]

Jon.....time for you meds.

[jon]

No thanks, I'm saving up my meds for Election Night. With the now nationalized banking industry, and soon health care industry, measures like the proposal from the Chairman of the House Energy and Commerce Committee, Rep. Rangel, to eliminate mortgage deductions for houses over 3000 sq ft (http://realtytimes.com/rtpages/20070827 ... deduct.htm) will get easy sailing under an administration that wants to "spread the wealth around".

[Dave0]

I'm probably going to regret opening this can of worms, but oh well...

Jon, what's wrong with a little bit of wealth distribution? Don't you think society would be better off with lower income inequality? Isn't it up to government to make that happen?

[rose-colored-coolaid]

[jon]

[deejayoh]

[perfectfire]

[rose-colored-coolaid]

[rose-colored-coolaid]

[jon]

[Markor]

[Markor]

Shiller makes a good point about diversification, but I disagree with putting the savings into stocks, which tend to be Ponzi schemes (unless the Dow hits 3000 or so). For those whose primary asset is home equity, the lack of diversification is tempered by the fact that home prices have historically tracked with inflation in the long run. Just don't buy at a bubbly price! Plus there is a benefit to locking in the price of a home in an area you intend to live in for a long time; that's like insurance.