"A few decades ago, the real estate and mortgage industries devised a marketing campaign to increase business. They began preaching a myth to Americans that home ownership is always a great investment with no risk, because “home prices always go up.”As a matter of fact, these industries have even made claims that real estate is a better investment than the stock market and has led to more millionaires. These statements are simply not true as historical data indicates.As a result of this propaganda, most Americans have the misconception that they can buy a home and it will always go up in price. But this is not necessarily true, especially when buying during the last stages of a real estate bubble.Even without the effects of a bubble, in many cases the annual expenses associated with home ownership wipe out most of the gains in appreciation, yielding relatively modest returns.For the average American, the fact is that residential real estate typically provides about the same rate of return over a twenty- to thirty-year period as a money market mutual fund after you deduct the total costs of property ownership. However, unlike a money market fund, owners of real estate have significant liquidity risk as well as other risks specific to this asset class.Of course, there are several variables that can deviate from these results, such as obtaining a low-interest fixed mortgage, buying a home in an area that becomes rejuvenated, and so forth. But these are not typical conditions and therefore cannot be relied upon with much certainty. Regardless, widespread speculation continues to fuel perhaps the biggest real estate bubble ever seen in America. And the consequences are going to be devastating for millions."
Only clients who subscribe and members have access to the article
Restrictions Against Reproduction: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the copyright owner and the Publisher.
These articles and commentaries cannot be reposted or used in any publications for which there is any revenue generated directly or indirectly. These articles cannot be used to enhance the viewer appeal of any website, including any ad revenue on the website, other than those sites for which specific written permission has been granted. Any such violations are unlawful and violators will be prosecuted in accordance with these laws.
Article 19 of the United Nations' Universal Declaration of Human Rights: Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.
For investment funds and financial institutions seeking to improve their performance