THE AMERICAN DREAM??

For years, the consensus by most economists , was that the fastest way to wealth is through the real estate market. From 1997 to 2005, the United States real estate market saw the biggest increase in home value's ever. Many people capitalized on the robust market and made well on the "flip"(the practice in which properties were purchased for cheap, rehabbed, and re-sold for exponential profits). Equities sometimes soared into stratospheres that easily exceeded $100,000. Everyone benefited from the bubble, especially the lenders.

But all good things must come to an end... Right?

Now I can talk endlessly about what and whom contributed to the demise of the real estate market(which began its descent circa 2005). The point is, the market is in such a quagmire that many economists are now saying that renting in some places is better than owning.

Not so! Home ownership is the gateway to the American dream. Right?
Maybe, just maybe, we should examine just why the allure to home ownership is not what it's been in years past.

The principals behind home ownership have shifted and the ideals of wealth have been misconstrued. When my grandparents purchased their home in 1971, their idea was to pay the mortgage and have the deed to that home. They wanted to OWN the home. This was the motivation of many older Americans who took out mortgages; albeit 15, 20, or 30yrs, their intentions was to possess the deed to the property that they so tirelessly paid for so long.
Fast forward to the housing bubble and most homeowners (not all) never foresee truly owning the property. Many of those who benefited from the bubble, had success flipping properties and either purchased other properties, or upgraded to bigger properties. And in the era of inflated home values, some made out like bandits. Real estate was seemingly fool proof. Lenders began creating exotic loans to put families who would not qualify ordinarily, into these homes, because even they (the banks) counted on the quick sale if the family could not sustain payment.
Fast forward even further, and we are in the worst economic tailspin since the great depression. Jobs are being lost and foreclosure rates are staggering. One of the main reasons why the foreclosure rate has sky rocketed is because many people forgot one of the tenets to wealth. A home is not an asset until you sell the property and profit. Home equity is meaningless if you can't sell the property. Home equity lines of CREDIT and Home equity LOANS are great for short term , but have to be paid back. A loan and credit are two things that contribute to debt, not wealth.
And shall we mention re-adjusted home values?! Many people's homes have actually lost value and some of those people have worthless loans because their balances exceed the worth of the home. So now, if you cannot sell the property, then your stuck paying for a house that is for all accounts worthless. Now what makes that any different than renting? Tax benefits? maybe...
What about increased property taxes in some places? No one wants to mention the elderly people whom for years possess the deeds to their homes, who are retired, and can't afford the property tax, and subsequently lose their homes. That begs the question, do you ever really own the home you pay for? We all know what happens when one neglects their mortgage. But one pays taxes forever. And some people, like my grandmother, have tax bills that exceed their mortgage. It sounds more like a money pit than a money maker. Try not paying your taxes and you will be in the same capsized boat as those who don't pay their mortgage.

Now of course, this is just me playing devils advocate. I truly believe, the housing market like everything else, will bounce back to viability. But I think, given what occurred with the bubble bursting, buying a home will go back to becoming a strategic, carefully planned process like it once was. I think the loan process will be revamped so that those and only those who truly qualify will get mortgages. I just think we all need to examine this issue from every angle. Sometimes it's fun to be the pessimist. This is food thought, you do the dishes.