While home is still where the heart is, it is no longer where a good value is. Yep, apparently home ownership is not all it is cracked up to be and home owners are being encouraged to look elsewhere for long-term investment returns. According to Brian Moynihan, CEO of Bank of America, housing prices in some areas may not rebound long-term. Low population growth in certain regions of the country along with the long-term effects of the worst financial crisis since the Great Depression will keep prices from rising. “It’s sobering to think, but some people shouldn’t be thinking of (their home) as an asset,” Moynihan said on Tuesday, April 12th at the 2011 National Association of Attorneys General conference. He also added “they should be thinking of it as a great place to live.” Moynihan went on to further explain that the gains in the past were due to the explosion in the domestic population as well as the relaxation of credit standards in mortgage underwriting. Given the swinging of the pendulum around credit standards as well as a slowing rate of population increase, the trend is not expected to continue.
Personally, I am not sure if I can accept the premise that home ownership is worth less now. We grew up believing in the value of home ownership. I don’t think conclusions can be drawn around how people may begin to think about their homes differently, given that they may not appreciate in value. While you can look for higher returns on investment elsewhere, can you find a better investment if your ROI objective is sanctuary? For me, there is no better investment.