Ritholtz: “Many people should buy a home”

From Ritholtz over at Bloomberg View:

Still a Lot of Negativity on Housing

There has been a steady drumbeat of negativity about housing ever since the residential real-estate market crashed. While there are some signs of recovery, psychological damage persists.

It has been a few years since we last looked at this issue, so we’re overdue for a revisit.

Everyone has to live somewhere, and where and in what kind of housing you choose is crucial to your quality of life, your kids’ education and your ability to save for retirement. And because so many resources are devoted to sheltering the 320 million-plus Americans, the industry makes up a significant part of the economy.

Before we go further, I am not advocating an expansion of home ownership as a government policy. But I will say this: given the state of the economy, housing prices and historically low interest rates, many people should buy a home.

However, at some point in life, you probably no longer want to have a landlord telling you what color your walls can be or become tired of having strangers share a wall with you. I am not a zealous believer that everyone should go out and buy a home. However, for many people, buying makes sense — especially with mortgage rates as low as they are (the current rate of about 3.45 percent for a 30-year fixed-rate mortgage is just 0.10 percent higher than the record low).

There are lots of other reasons to buy, based on whether someone plans to live in the same area for five years or more, wants or needs a tax deduction, is concerned about the quality of local schools or simply wants the greater social stability that ownership tends to confer.

Obviously, not everyone or every time is suitable for buying.

However, home ownership still seems to be out of favor. I have blamed the recency effect for this in the past, but as home ownership rates continue falling, it make me wonder if what was once the American Dream has given way to a cultural shift in attitudes toward housing.

Whether that is on the verge of changing anytime soon will likely be determined by how soon the millennials move out of their parents’ basements, form households and start having kids. If that happens, that should bode well for the housing market.

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68 Responses to Ritholtz: “Many people should buy a home”

  1. Juice Box says:

    Did that dirty renter ChiFi ever buy a home?

  2. 30 year realtor says:

    Comrade, still trying to understand the connection between that link you posted yesterday and BLM/Palestinians. There were no Palestinians in the story. There were no protesters or black people with a political agenda. Instead of calling my ability to reason, knowledge of current events and intellect into question, why don’t you just tell the truth?

  3. GOP's broken (the good one) says:

    I think that this is a fair question.

    30 year realtor says:
    August 25, 2016 at 8:37 am
    Comrade, still trying to understand the connection between that link you posted yesterday and BLM/Palestinians. There were no Palestinians in the story. There were no protesters or black people with a political agenda. Instead of calling my ability to reason, knowledge of current events and intellect into question, why don’t you just tell the truth?

  4. homeboken says:

    Real Estate question – I am seeing many more homes in, what many consider, desirable towns that are being converted in two family homes.

    The typcial home is usually in Summit, Millburn, Westfield type of area. They are much older and very large homes that are divided into two homes usually under 2500 sqft. they come with all the renovation suspects, hardwood thruout, granite, stainless etc. But the interesting thing is that these also come with asking prices of 1.0mm. Do these things sell? I am a home buyer in that general price range and it never occured to me that I would spend 7 figures and share a wall/yard/garage with anothe family at that price point? The whole idea seems strange to me but then again, they are being built so I am guessing that someone is buying them. Anyone have any insight? An example is posted here: MLS #: 3280950 30A Rector St Millburn (and 30B).

    http://www.zillow.com/homes/for_sale/Millburn-NJ/house,condo,apartment_duplex,townhouse_type/36150_rid/310000-5000000_price/1087-17536_mp/mostrecentchange_sort/40.752913,-74.256506,40.696257,-74.348774_rect/13_zm/X1.dash.SSc0at8utwsphn_4pyss_sse/0_mmm/

  5. Anon E. Moose, Second Coming of JJ says:

    A-none [5];

    I think that this is a fair question.

    I have severe doubts that you understand the meaning of the word “fair”. Define “fair share”, as in the amount of taxes you expect one of the 53% to pay, as a numerically determinable value.

  6. Nomad says:

    #5 – a couple of the ones in Millburn have dropped to the high 700s. The are not on particularly good streets relative to other neighborhoods in the area.

    I would think at this point, a prudent buyer who was not under undue pressure to make a home purchase would wait until the election is over. Despite the banter on this board as to why things may or may not be getting better, unemployment is far higher than reports indicate. Massive federal debt, unfunded entitlements, a pension system under immense pressure and more and more automation taking jobs away. Seniors in dividend stocks to get yield may also be in for a rude surprise. H1B issues, etc…

  7. Homeboken says:

    Nomad – if like to think I am a prudent buyer- but waiting until after the election may have regular in the overall economy pulling back via the markets. Which will lead to a credit market tightening. This may only make it harder to procure a low rate fixed mortgage. The homes for sale will likely not drop in price accordingly as many cases the sales price is not indicative of a market rate transaction. Rather it is a transaction that hits the “must have” price for the seller to pay off existing debt/have cash to buy the move up home/ cash to retire. The prices will move much more slowly than the credit market so I think a pull back in the economy will only hurt me as a purchaser. Thoughts?

  8. The Great Pumpkin says:

    Massive debt? We are coming out of the worst economic spell since the Great Depression. The debt isn’t even as high as it was after wwII. You are worrying about something that will be fixed when the economy goes into a boom period. Stop worrying about unfunded entitlements and the pension system, this will all be fixed to sustainable levels with inflation and a boom period.

    As for unemployment, the reports are based on the same got damn unemployment rate we have used for a long time. The measure is legit. The people that have skills and want to work are working, enough with this nonsense that the numbers are off due to whatever excuse the naysayers use. Why are you going to include people who are not really looking for work, or are not about making themselves competitive enough to get a job. They have no business being included in the measure since they are not employable and that’s no one’s fault but themselves.

    The writing is on the wall, good times are coming, might be a quick recession between now and 2020, but after that, the boom will indeed be here. Believe what you want to believe, but the economy doesn’t stay down forever, it follows cycles.

    “Despite the banter on this board as to why things may or may not be getting better, unemployment is far higher than reports indicate. Massive federal debt, unfunded entitlements, a pension system under immense pressure and more and more automation taking jobs away. “

  9. chicagofinance says:

    Have not…..

    Juice Box says:
    August 25, 2016 at 8:15 am
    Did that dirty renter ChiFi ever buy a home?

  10. Captain Nom Deplume, Besotted Rummy says:

    [4] twitiot,

    You wouldn’t know the truth if it bit you in the ass. No, there were no Palestinians in the story. That’s where the thinking part comes in. But I suspect, I’d lose you there.

  11. Captain Nom Deplume, Besotted Rummy says:

    What I really came to post, instead of rejoinders to idiots.

    https://pjmedia.com/lifestyle/2016/08/24/not-the-onion-state-university-has-stop-white-people-event-for-ra-training/

    Otto, you finally landed a teaching gig?

  12. The Great Pumpkin says:

    5- Homeboken, if you are questioning it, I would avoid it. Save up more money, and get a legit home in that area. These duplex are screaming to buyers who can’t afford the area, want to live in a brand new home, and have no problem sharing a wall with someone. Got damn developers will try to take advantage of whoever they can. Guess this is their way of maximizing profit.

  13. The Great Pumpkin says:

    For someone so smart, losing out on a lot of money on the basis of stubbornness. Even my “cold market” in Wayne has made me some money.

    chicagofinance says:
    August 25, 2016 at 11:38 am
    Have not…..

    Juice Box says:
    August 25, 2016 at 8:15 am
    Did that dirty renter ChiFi ever buy a home?

  14. The Great Pumpkin says:

    Lol… Clifton market is “very hot” according Zillow. Might be one of the hottest markets currently in north jersey.

  15. chicagofinance says:

    nice to hear this part….
    https://youtu.be/rW-nSDJXK4w?t=8m14s

  16. The Great Pumpkin says:

    15- It’s all coming together. Clifton heating up is the first step to getting “cold” markets in the burbs to get hot. As people sell in Clifton, and upgrade, they go to outlining burbs. It’s all happening before our eyes, setting up for the epic boom of the 2020’s.

  17. Captain Nom Deplume, Besotted Rummy says:

    [3] 30,

    First, do some homework. Read up on the PLO, Hamas, the intifadeh, and the grievances that the Palestinians have against Israel and Israelis. Then read up on the black community, their grievances, their thinking, and then do research about black-on-white hate crimes (yes, there is such a thing), knockout game, and the assorted black liberation groups that have existed since the 60’s (Black Panthers, MOVE, BLM, etc.).

    At that point, you will have the raw knowledge. I can’t point out parallels in history if you don’t know the history. That’s like describing a skyline to a blind man.

    As for telling the “truth”, that’s a curious term insofar as I am seeing historical trends that seem to mimic one another. Are you suggesting that “truth” lies in the perception that they are (or are not) mimicking one another? The problem with equating perception for truth is that, in your eyes, all you need to do is disagree with me and I am not “truthful”. Conversely, all I need to do is disagree with you and you are not “truthful.” See how that dialect gets you nowhere?

    But, you are not completely wrong in that “truth” in a disputed setting is what the finder of fact says it is. You are not speaking of absolute truth but what a majority believe to be so. So you may disagree that I speak the “truth” but if more people believe me than believe you, what then? You still think I’m wrong.

    But I digress. Read up on the history (I don’t have to, I remember most of it vividly enough), then get back to me and we can debate how the event I described does or doesn’t resemble this:

    http://www.haaretz.com/israel-news/1.728013

    (and to be fair, I’ll tell you that if you fall into the “well, that is just one anecdote” trap, you’ve lost and lost badly. So do yourself a favor and don’t go there).

  18. chicagofinance says:
  19. GOP's broken (the good one) says:

    chicken little on steroids

    “….unemployment is far higher than reports indicate. Massive federal debt, unfunded entitlements, a pension system under immense pressure and more and more automation taking jobs away. Seniors in dividend stocks to get yield may also be in for a rude surprise. H1B issues, etc…”

  20. GOP's broken (the good one) says:

    @jbarro

    Why does Trump think a reductive, ignorant, condescending pitch to blacks will work?

    Because it worked with whites.

  21. Captain Nom Deplume, Besotted Rummy says:

    [19] redux

    And hey, if the left says that there are parallels, then there must be parallels, right?

    http://www.truthrevolt.org/news/social-justice-warriors-link-palestinian-plight-black-lives-matter

  22. Fast Eddie says:

    Why does Trump think a reductive, ignorant, condescending pitch to blacks will work?

    He sees the game plan the democrats have been using for 50 years.

  23. Essex says:

    25. He’s coming at it from a cynical viewpoint. The same one that mobilized nervous white people. That’s his pitch – take it or leave it. He’s a shyster.

  24. Essex says:

    JJ Found:

    Sir Ivan’s Sinful 60 Birthday Party
    Wilzig with guests at the party.Getty/Jerritt Clark

    Ivan Wilzig, known as Sir Ivan, is many things. Former banker. Electropop dance artist. Philanthropist. Reality star.

    And now, apparently, God.

    The personality threw himself a 60th birthday party at his 15,000 square foot home which has been called “The Playboy Mansion of the Hamptons.” He called it his “Sinful 60” party, complete with a Biblical “Garden of Eden” theme.

    Wilzig may now be 60, but if this shindig is any indication, he’s not slowing down any time soon.

  25. joyce says:

    19
    My favorite Nom take down.

  26. Fast Eddie says:

    He’s coming at it from a cynical viewpoint. The same one that mobilized nervous white people. That’s his pitch – take it or leave it. He’s a shyster.

    Again, the democrats playbook for 50 years running.

  27. nwnj3 says:

    I think the country needs a good dose of cynicism, I see naivety everywhere. Since she flipped the script at the convention and announced everything is well it’s like an echo chamber from the media and morons like anon are eating it up.

  28. STEAMturd says:

    Everything’s up to date in Kansas City.

  29. Essex says:

    30. Fair enough, cept the Shyster part.

  30. Essex says:

    Someone tell me what Socialized medicine is all about:

    A couple from British Columbia who have been married for 62 years are being forced to live apart after because of a shortage of spaces in care homes in the town of Surrey. Wolf and Anita Gottschalk have been married since 1954. Wolf is in declining health and misses his wife of six decades. The family are doing all they can to ensure they spend as much time with one another as possible, however it is still a half hour drive between their respective care homes. When the time comes for them to part once more

  31. Anon E. Moose, Second Coming of JJ says:

    Nom [24];

    OUCH!!! That’s gonna leave a mark…

  32. The Great Pumpkin says:

    Bingo!

    Essex says:
    August 25, 2016 at 1:16 pm
    25. He’s coming at it from a cynical viewpoint. The same one that mobilized nervous white people. That’s his pitch – take it or leave it. He’s a shyster

  33. Pete says:

    Hey, does anyone know a term that describes pseudo intellectual mental masturbation? Trying to find a word to describe Nom’s post in #19. And most of his posts for that matter.

  34. STEAMturd says:

    “pseudo intellectual mental masturbation?”

    Mensa.

  35. chicagofinance says:

    slam poetry….

    STEAMturd says:
    August 25, 2016 at 3:11 pm
    “pseudo intellectual mental masturbation?”

    Mensa.

  36. Essex says:

    39. 40. on point

  37. STEAMturd says:

    It’s ULTA time. Most I could convince the club to sell off prior to earnings was 1/3rd of it. If I owned any in my own account, I would have sold off 2/3rds of it. Since our first purchase on 04/18/2013. We have averaged a 44% annual return. Pray for Mad Loot.

  38. STEAMturd says:

    I sometimes do slam poetry. But not without a background bongo track.

  39. STEAMturd says:

    ULTA beats…nice. Is good to be wrong sometimes. How the heck are they doing it? Up 78% this year already.

  40. chicagofinance says:

    also Scientology

    chicagofinance says:
    August 25, 2016 at 3:49 pm
    slam poetry….

    STEAMturd says:
    August 25, 2016 at 3:11 pm
    “pseudo intellectual mental masturbation?”

    Mensa.

  41. STEAMturd says:

    When ever anyone talks about Scientology, I can’t help but join in the L. Ron Hubbub.

  42. 30 year realtor says:

    Comrade, your comments to address me speak loudly. I could not paint you as a racist more clearly than you have painted yourself. Making that leap from the article you posted and backing it up with the explanation you offered is the clearest admission you could make.

  43. Essex says:

    New Jersey’s public pension fund is shakier than all but two U.S. states also known for their notoriously underfunded retirement systems, according to a new comparison by the Pew Charitable Trusts.

    The pension fund was just 42 percent funded in 2014, based on the latest data available for 238 retirement plans in 50 states, Pew said.

    Illinois and Kentucky were each only 41 percent funded. Only three states — South Dakota, Oregon and Wisconsin — were more than 100 percent funded.

  44. STEAMturd says:

    That leaves out the unfunded medical portion which most people estimate doubles the size of the whole. The healthcare portion is very different in NJ than in most other states because most other states politicians did not include Cadillac healthcare as part of the benefits equation. Of course, few states are as blue as NJ.

  45. Outofstater says:

    I have always found Nom de Plume to be intelligent, thoughtful and well-spoken. I miss the old njrereport where posters were called to defend their positions on issues and yet treated with respect.

  46. STEAMturd says:

    Here are the REAL numbers. As of last year, the average NJ Household owes $60K to make the retirement pay and benefits whole. That’s a lot of Benjamins. Theoretically, it sounds nice to put up to a referendum to make the system whole. And the fair solution lies somewhere in between making it whole and giving back some of what was insanely promised by our paid for politicians. But structure the referendum question with the true costs at least.

    http://watchdog.org/237832/nj-benefit-debt-200b/

  47. STEAMturd says:

    2019…invest in the run on popcorn.

  48. HouseWhineWine says:

    50). exactly why I quit dealing with this blog a month or two ago. It actually felt like bullying, and I don’t understand how adults can be this disrespectful. It’s a shame, there is some very good information to be found here, but the vituperation that exists these days on this blog is a big turn-off.

  49. STEAMturd says:

    It’s really the Plumpster. I have the power to ignore it though.

    Here’s an interesting anecdotal story from tonight’s dinner in the family lounge at CHOP. We shared dinner with a mother who is a teacher. She has racked up nearly 4 million in medical bills. So far, her total out of pocket for over two years of medical care is $695! This is a 100% true story. Also, she’s been out on medical leave now for over a year and the benefits continue.

    ‘Nuff said.

  50. Juice Box says:

    In todays of edition of will it sell.

    The newly separated Mary J. Blige has knocked a cool $1 million off the asking price of her French Country estate in Saddle River, the Trulia.com listing shows. It’s now listed at $10.9 million.

    The R&B star and actress, who filed for divorce from her husband and manager Kendu Isaacs in Los Angeles in July about 12 years of marriage, reportedly bought the estate for $12.8 million in all-cash deal in 2008. She put the house on the market in 2015 for $13 million and reduced the price in April to $11.9 million.

    http://realestate.nj.com/realestate-news/2016/08/mary_j_blige_house_for_sale_sa.html#incart_river_home

  51. 3b says:

    51 lib: seriously! Pumps addressed this problem and devised a solution months ago! It’s all good.

  52. Comrade Nom Deplume, the Deplumiest. says:

    [47] 30

    Racism is like ketchup. You can put it on anything. Frankly, I’ve been called worse by better.

    I asked you to study the issue. You called me a racist. I expected that–you signaled it well enough, just as you signaled you’d be unreceptive to any persuasion from me. So why would I bother to persuade you?

    I doubt you considered your response or how it would read. I invited you to prepare and come when you were ready. You sidestepped that and resorted to the only card in your hand.

    I’ve no doubt you’ll have the backing of footrest, twitiot, gluteus, and probably Joyce. I don’t care. And since we are hurling insults, I won’t stoop to your level. Chew on that for a bit–there’s more there than you know.

  53. Comrade Nom Deplume, the Deplumiest. says:

    [47] 30

    FWIW, I had no idea WTF you were saying. But it sounded insulting.

  54. Comrade Nom Deplume, the Deplumiest. says:

    [50] out

    I appreciate the comments but when it comes to some readers and posters here, the phrase pearls before swine comes to mind. Suffice it to say, if a part of the criticism is that I’m phoning it in and not being especially rigorous, guilty as charged. Call it lazy if you like but in truth, I’m just tired.

    That’s why I don’t get into it with pumps. First, I can’t simply dismiss and insult when there is thought and analysis, even if contradictory or incomplete. Second, with his volume, it would be a fcuking tar baby and a full time job in and of itself.

  55. joyce says:

    Comrade,
    You also fail to consider there’s even the slightest possibility that you’re wrong. Do you think your original and follow-up posts contained any ad hominem, assumption of facts not in evidence, attribution of motive, or confirmation bias? I’m told those are logical fallacies: [http://njrereport.com/index.php/2015/03/20/you-know-its-bad-when-detroit-replaces-atlantic-city-in-monopoly/#comment-670579]

    Next question, seriously why can’t you just admit you enjoy the back n forth with the “lefty” posters here, your “facebook friends”, etc? Just own it; no need to pretend otherwise with your posts about not responding to them.

  56. Comrade Nom Deplume, the Deplumiest. says:

    Anyway, what I came back to post. This isn’t op-Ed, it’s straight reporting from WaPo.

    Big Brother would be proud. Or Ernst Goebbels. Certainly 30 Year and the twitiot would approve.

    https://www.washingtonpost.com/news/powerpost/wp/2016/08/25/va-moves-to-restrict-treason-symbols-at-cemeteries/?postshare=9811472154494320&tid=ss_fb

  57. Comrade Nom Deplume, the Deplumiest. says:

    [60] Joyce

  58. juice box says:

    Hillary is losing if she has to mention Alex Jones.

  59. chicagofinance says:

    amazon proof…..to a point…

    STEAMturd says:
    August 25, 2016 at 4:15 pm
    ULTA beats…nice. Is good to be wrong sometimes. How the heck are they doing it? Up 78% this year already.

  60. Anon E. Moose says:

    https://twitter.com/NotKennyRogers/status/769026243501166592

    @NotKennyRogers
    According to a recent CNN poll, 104% of Americans do not believe the media is rigging the presidential election.
    12:18 AM – 26 Aug 2016

  61. Anon E. Moose says:

    30-yr [47];

    I could not paint you as a racist more clearly than you have painted yourself.

    “5. Democrats Have Cried Wolf On Racism So Often That This Won’t Help Them Much”
    (linky)

  62. Maintain the exceptional work !! Lovin’ it!

  63. Love the site– really individual pleasant and lots to see!

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