Houses still remain sound assets

By Charles Carter Comments 0
Published: October 24, 2009

Q: What will be the long-term effects on homeownership of the recent recession? It seems that homeownership has been one of the things most Americans looked forward to during their lives, and it would be a terrible thing if people lost their ability to buy a home. What do you see as problems in the future?

A: Tony Downs of the Brookings Institution notes that the National Association of Realtors reported 38 years of continuous increases in the national median price of single-family homes sold from 1968 to 2006. There is no reason that this long-term trend will come to a halt. And there is really no reason to think that housing won’t be a good investment in the near and distant future.

Homebuyers will face tougher borrowing terms and larger down payments than they did in the recent past. People should realize that the mainstays of housing finance are intact. The Federal National Mortgage Association, known as Fannie Mae, for instance, begun in 1938 as part of President Franklin Delano Roosevelt’s administration, is now healthy and operating as it should.

The percentage of Americans owning homes, or more expensive homes, will drop from previous levels. Studies have shown that the high level of homeownership in 2006 was unsustainable.

Charles Carter is an assistant professor of real estate in the Barry Kaye College of Business at Florida Atlantic University. His areas of expertise include urban economics, mortgage-backed securities, appraisal methodology, law and economics. E-mail questions to ccarte31@fau.edu. Please include your name, city and state.

McClatchy-Tribune

Information Services