Dear John: A reader recently asked about securing his money that’s in a national bank as he prepared to purchase a home for all cash. Your closing remark – “You may be the only guy buying one right now” – is part of the housing problem.
My parents purchased a home 40 years ago. Today it’s worth 30 times what they paid for it. My home is worth 2 ½ times what I paid in 1989. If someone is looking to purchase a home as a primary residence and can afford it, can you tell me a better way to build equity and enjoy the advantages of owning a home? Raymond
Dear Raymond: A house is one of the best ways to build your assets. And if purchased at the wrong time, it’s also the quickest way to go broke.
OK, maybe I was being a little snide in that final comment after I told that reader how to protect the money he had in the bank. But my skepticism isn’t about the value of a home – “as a primary residence” and “if you can afford it” – I simply believe that prices will come down some more. And now isn’t the best time to buy.
Am I contributing to a lack of confidence? I sure hope so, because housing has been a confidence game – in the worst sense of that phrase – for too long.
Don’t just take my word for the ill health of the housing market. In addition to the constant bad news about home sales, foreclosures and the like, even the International Monetary Fund recently warned that there is no end in sight to the US housing recession.
That’s why I don’t think this is a good time to buy a house. I think people will be able to buy more cheaply in the future. You and your parents made a good investment in real estate because, you bought at the right time.
The equity watchers, well they are screwed. And those who speculated in second houses, or used primary-house equity to expand their real-estate empire are likewise out of luck. I agree with you – a house is a great way to build wealth, not to mention to keep you and your family dry. I just don’t think that housing at current levels will give people the kind of return that’ll have their offspring crowing about it 40 years from now.
Send your questions to Dear John, The N.Y. Post, 1211 Ave. of the Americas, N.Y., N.Y., 10036, or john.crudele@nypost.com.