Buy and Hold for 5 years?

[rose-colored-coolaid]

If you want to hear a very interesting comparison to the current housing environment, . It compares the housing crash in Texas to the current housing crash sweeping the nation.

Here are some interesting points from the article. The major cities in Texas all took 3-5 years from peak to trough. A full recovery took between 8 and 14 years.

Gee, don't these numbers sound similar? Kind of like the California crash in 1990? And how about the Tokyo crash? Apparently, when you combine speculation, teaser interest rates, and an economy where housing is the main driving force it tends to take 5 years for prices to drop to their trough, and a decade for them to return to earlier levels.

Of course, if you think that's a good deal, don't forget that real value of the property has declined by over 30% just due to inflation.

[laxtosnoco]

My brother moved to Texas recently (to a mid sized city that participated in the petroleum boom/bust) and the way he tells it, the tough times in Texas still influence people's ideas about homeownership. Folks who've lived there a while see purchasing a house as consumption, rather than the common sense notion here that homeownership is a savings strategy. The odd thing is that in the town he lives in, mortgage payments are lower (not even counting tax savings) than renting similar properties.

It's a wonder what a decade of deflation in home prices will do to the idea of what is common sense.