Kelly Sweeney, CEO Coldwell Banker Weir Manuel
A few years of a down market does not wipe out over 200 years of American real estate history. Owning your own home is as much a part of the American dream today as it was for our parents and grandparents. There are people flocking to America every day with the hope that they, too, will be able to someday purchase their own home: a place where they can raise their families and invite their friends; a place where they can build the memories that become the family stories that will be passed down from generation to generation.
This issue will cover Dumb Reason #1. Watch for the rest of the Dumb Reasons in future issues:
Dumb Reason #1: Real Estate is no longer a good investment
There is no doubt that houses in this country have lost substantial value over the last five years. One could make the argument that the purchase of a home should not be looked at as a financial decision. However, it cannot be denied that a home is the largest single investment for most people.
What about those who bought at the peak of the market? Some people have lost up to 50% of their home’s value.
However, those who placed money in the Dow in 2007 and sold it in January 2009 would have lost 49.3%. Even if they sold today they would still be at a 26.7% loss. Does that mean that we should never again invest in stocks?
If someone bought gold at the end of 1987 and sold it in 2000 he would have lost approximately 50% of his investment. I am sure there were people in 2000 who decried gold as an investment when it dropped to almost $250 an ounce. I hope people didn’t listen as gold is now trading for over $1,200 an ounce.