Homeownership Needs No Defense -- At Least, Not This One

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Irrational exuberance emanated from the National Association of Realtors’ just-concluded NARdigras conference in New Orleans. (We don’t want to know what the agents did to win beads.)

Everybody in sales is hardwired to be glass-half-full types. But the agents’ business model is broken. Their glass is cracked and leaking. They are not helping themselves by releasing chipper reports documenting the supposed investment value of homeownership….over this decade.

Here’s an excerpt from the just-released NAR Survey of Buyers and Sellers:

“Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent.”

In this one paragraph, the NAR glosses over eight years of losses. Nationally, home values have slid back to the 2002 level. And the slide is accelerating, according to this week’s Zillow report.

The American model of homeownership is crumbling. Nobody can afford to let an agent carry off their paltry equity. Homeowners cannot count on recouping the money they put into remodeling. Just yesterday, a prominent appraiser told us in an interview that no homeowner ever recaptures maintenance expenses. You bought the house with a roof. You sell the house with a roof. How much it costs you in between to keep a roof on the house is not an investment. It’s an expense.

We believe in homeownership. We believe that owning a home is a financial and social cornerstone appropriate for the majority of American families. Home equity anchors a secure retirement, can be tapped to start a business, and can serve as a source of emergency savings.

Buy a house for economic and family stability and self-determination. But don’t buy it counting on a juicy return.

The NAR should listen to its own customers, who agree with us. Its own survey found that the single biggest reason cited by homeowners for wanting to own a home is to ..own a home that is their own. Isn’t that enough? It is for us. Why isn’t it for the NAR?