They report housing prices are up like it’s a good thing!

 Heard on the radio this morning, report that “Housing Market Turning The Corner After 5-Year Slump” as if it were a good thing.

At the same broadcast, we hear someone else announcing the bad news that gas prices are up again. And, woe betide the grocery stores if they are seen to be raising prices!

So, food and gasoline up = bad, but housing prices up = good. Why? Actually, prices for the food and gas go up and down on a fairly regular basis, except the general trend is up, due to inflation.

Answer: some people are still buying the false proposition that buying a house is an “investment.” And that prices should always go up. And that there doesn’t need to be any connection to the general income level of the population, or employment, or any other economic metric.

Now, the only time your house and the land under it can be considered an investment is if you are producing something valuable on the property. A garden, say, from which you can sell or trade your excess produce after you have replaced your own food expenditures. Or a home business from which you can produce a valuable good or service for others. Or if you can rent one or more rooms out for income. Or maybe get a natural resource extracted, say, gold or diamonds or coal or trees.

Otherwise, it is a place to live. Period.

It is a consumable, not an investment. You always have to keep putting money into it. Mow the lawn. Fix the toilet. Replace the leaking roof. Add a garage to protect your car(s).

So, why do you go into long-term debt to obtain a consumable? Because you’ve been convinced it is a smart thing to do. And once you have a mortgage you’re a grownup and will defend your action almost to the death as a smart economic move.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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