Dispelling The Myth Of The Home Wealth Package

For yet another year, real estate prices across all metropolitan areas in the United States fell

. Despite the valued opinions from real estate brokers and others who would benefit from the recovery of the market, prices keep dropping.

This is especially a problem for a generation of people raised believing that buying real estate was a requisite home wealth package, a way of investing your hard earned money that was sure to pay off in the long run.

The home wealth package has instead become a severe liability for most people who are now looking at owing more on their home than it is worth. For the first time in decades, people are talking about the benefits of renting over owning.

Perhaps the concept of the home wealth package itself was the problem. It used to be that people bought a home they loved because they wanted to live there long term, raise their children there, and potentially have their grandchildren visit them there.

Somewhere along the line, this concept of home owning changed into people buying houses they could barely afford because they believed they could make more money on their home than any other venture. This was the myth of the home wealth package.

The truth is that the popular vision of the home wealth package was always imaginary, even during the real estate bubble. Unless you were purchasing a house on the cheap, fixing it up and selling it at a profit a short time later, you were almost always spending more money on a house than you were gaining.

Unfortunately, people did not see this, and once the mortgage lenders began handing out ill advised loans, it was a short time before the crisis we find ourselves in today. While the home wealth package was not a scam, it was a bad idea that took us away from traditional American values.

Perhaps more unfortunate is the fact that the cycle is starting all over again. Now that homes are so cheap, people who have the money to buy them are starting again, convinced that eventually all the housing prices will rise and they will have a huge payout.

The truth is that this economic crunch is going to take a long time to recover from. Maybe we should take this time to get back to our roots, and start treating home buying like an investment into our future, but as families and people who care about our communities, rather than faceless investors looking to turn a profit.

by: Steve Albright

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