Housing No Longer Rewarding, Analysts Say

In an article on CNBC, housing is no longer a lucrative option, say analysts. Though it will recover some of its lost glory, owning a home will never yield rewards like it did many years ago. The wealth generated by homes, particularly on the coasts, assured homeowners a comfortable retirement, kids’ education, and general well-being of the economy. That era is “gone for good,” remarked Stan Humphries, chief economist for the real estate site Zillow. All those theories that surfaced during the housing boom no longer work now following the bursting of the housing bubble. According to Humphries, housing prices will only “keep up with the inflation.” Owning a home will only do so much as return the investment, not multiply it. Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take more than two decades to recover the $6 trillion worth of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up. Housing experts are eagerly waiting for the July home sales data, due on Tuesday. The data is expected to show a drop of as much as 20% from last year. According to their estimates, the supply of homes may rise to twice its existing number in the next 12 months. This is expected to push down prices even further; adding to what has been an already reduced market by as much as 30%. In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10% every year for the next decade. Read more on CNBC.