Actually, the real question may be whether buying a house has ever truly been a good investment.
Robert Bridges, a California economist, roiled the waters last year with a rather stunning opinion piece in The Wall Street Journal.
Bridges, a professor of clinical finance and business economics at the University of Southern California's Marshall School of Business, ran the numbers on the investment return on an average Golden State home from 1980 to 2010.
A $19,910 down payment would have yielded a house worth nearly $300,000 by the time the homeowner had paid off the 30-year mortgage.
OK, not too shabby.
But if that same money, plus the extra costs that come with homeownership, were put into the stock market, it would have yielded a $1.8 million portfolio by the end of that three decade span.
OK, this is big, big issue that could easily span a couple posts - we'll kick off the discussion today with a skeptic who is a familiar voice on the comment board of this blog.
James in Cambridge points to an overlooked dynamic that has shifted in recent years. For years, buying a starter home let homebuyers leverage their initial investment by selling for a nice profit after a few years and then moving up to a bigger, nicer and more valuable home. But, needless to say, the idea of a starter home has become one big fat joke.
The entry of women into the workforce drove a two-generation-long run-up in housing, as families with multiple incomes bid up housing prices. This allowed certain weird phenomena to happen, such as the ability of everyone to double or triple their down payment just by buying a "starter home" for a few years. That get-rich-quick scheme has come to an end, but many people in the older generation don't seem to realize it. Fifty- and sixty-somethings who haven't looked at RE prices since buying in the '80s still think the same principles hold: that buying a starter home early in adulthood is the key to building wealth, and that renting is throwing money away. This was true decades ago, but it's not clear what economic force could propel housing prices for years to come.
The author is solely responsible for the content.