In its article, 4 Current Myths About the Real Estate Market, ALO Real Estate’s writer Graham Wood lists out what he calls, per the title of his piece, myths. Well, lets look at those.
1. Real estate is still a great long-term investment.
Graham is referring to owning one’s own home rather than real estate, per se. We think the difference matters enough to clarify. Real estate as income property properly acquired and managed certainly has proven to be a great long-tern investment.
2. People are giving up on the suburbs.
We never saw that allegation as applied to all or even most people. The point of those who surveyed the youngest adults was to point out the opening for building more core apartments. We saw plenty of warnings against oversaturation as a longer-term possibility. Real estate developers appear, so far, not to be overbuilding. Also, as far as we could gather, they weren’t saying that young adults would live in the core of larger cities regardless of the lack of vacancies. Finally on this “myth,” if other costs such as transportation wouldn’t wipe out the savings, cheap enough rents in the suburbs would logically attract those who would otherwise culturally prefer to live closer to downtown.
3. We’re seeing a permanent shift to renting.
There were plenty of people who were burned by foreclosures, etc., who said they were swearing off homeownership. The point of most authors was that historically, the impact of the Great Depression stayed with many people for decades. Perhaps the attention span will generally be shorter concerning the Great Recession. That wouldn’t surprise us. The idea that only an insignificant number of people will shy away from homeownership due to the real estate-housing-crash nevertheless strikes us as premature, with or without survey responses.
Here’s an article with a different spin on the survey results: Survey unveils families desire to rent versus own.
4. Buying is again better than renting.
The only articles we saw spoke in terms of location. We didn’t see anyone making the statement concerning the whole country.
We think people, publishers, and different real-estate sectors are speaking at cross-purposes for marketing purposes whether they each realize it or not.
The home builders and agents have a vested interest in psychological signals boosting single-family-home ownership. The all-cash buyers aren’t going to keep it up at their current pace forever. Large, multi-family high rise developers, etc., have a vested interest in creating the idea that city living is “hip” or “in” relative to the suburbs and exburbs. The thinking is, who needs the hassles of ownership (and the costs of a car or to spend all that time commuting; though telecommuting is rapidly growing everywhere).