I received an email yesterday from Tom Goodwin, King County’s Chief Economist, pointing me toward a new blog that he has started to discuss economic issues in King County. The first topic: real estate.
In his post, Is a Home a "Lousy" Investment? Tom takes on the recent Wall Street Journal piece A Home Is a Lousy Investment, arguing that this view is too simplistic.
Tom’s 1,300-word post includes everything we love here at Seattle Bubble: graphs, tables, and detailed criticisms of underlying assumptions. His conclusion is sound, as well:
…homeowner equity with a mortgage is an attractive but risky investment, in some ways more risky that the stock market because a family can lose all of their equity. As with the stock market, deciding whether it would be a good investment depends crucially on how long the family can hold onto the investment.
Of course, even buyers that plan to hold for a long time were making horrible investments in 2006 and 2007, but for a more “normal” market, I think Tom’s analysis is fair.
Head on over to the new blog, read the whole post, and drop them a comment. It’s good to see more level-headed local commentary on these types of issues. Best of luck, Tom!