American Money Center Media Sources Want You To Believe Housing Sucks

The big back story is always ignored in all these money center centric housing stories.

There is a decades long battle for dominance in the fight to control, invest and manage your money. A dollar invested in a house is a dollar lost to Wall St.

Money goes where it is treated best so if the facts do not support your argument, simply omit them. As the trail lawyer said “If the facts are against you argue the law, if the law is against you argue the facts…and if the law and the facts are against you, scream bloody murder!”

If Wall St can marginalize housing and real estate as an investment, clearly they benefit. This week’s Newsweek analysis of housing concludes that the national average historic residential appreciation rate is 0.4% after inflation. This means any appreciation occurring between 2004 and 2007 is zeroed out if we return to 2004 home values, so housing is a marginal investment at best.  

Note the data they use is restricted to comparing capital rates, with no credit for housing as a utility, mortgage leverage or tax benefits. There is no mention of the fact a rented investment house is inflation proof by virtue of rent increases against fixed debt service. Compare the net return, after inflation, of an equivalent DJIA or S&P 500 investment? A well bought house grosses the owner four to five times the returns on their 401(K) or other typical Wall St traded asset investment.

The real estate media, mainstream media and “the negatives” in the blogosphere that blindly repeat these Wall St driven stories and statistics are the Viral Field Forces of disinformation. They are seeding and reinforcing the new cocktail party investment received wisdom decrying real estate.

You have to admit Wall St is doing a great job winning this PR battle for investment dollars. For example, the S&P-Case/Shiller Housing Index is part of this message. But they only use a sample of only 85,000 home pairs across 20 cities of 3,000,000 people or more to impute market value…a sample of 4200 house pairs per city and a clear bias to justify their index and their irrational exuberance generalizations. They conveniently ignore that this is less than 3% of housing stock and less than accepted statistical error factor.

93.6 % of American homeowners are current on their mortgage and have no intention of selling their homes in the foreseeable future.  Now what was the problem again?

As Reverend Ike was apt to say, “Help the poor! Don’t be one.”

Best: Andrew Waite - Personal Real Estate Investor Magazine