Tuesday, August 24, 2010

Your Home a Nest Egg?

Did you read the Seattle Times on August 23, 2010? Headline was “Your Home a Nest Egg? Not Likely Experts Say: The Future of Real Estate: Conventional wisdom: Prices will only keep up with inflation.” In the article, David Streitfeld from the New York Times notes that the real estate housing market has been hard hit but says that housing will recover….eventually. He goes on to say get used to the idea of home as shelter and not a nest egg, like it used to be. He quotes Stan Humphries, the chief economist for the real estate site, Zillow, saying housing values will merely keep up with inflation. I had to wonder: “is that a bad thing? Sure, like you, I want more, but how much is the inflation rate? I turned to Inflationdata.com and looked at a chart measuring the United State’s annual inflation by decade.


The average over time turns out to be 3.42%. That’s not too bad. My current rate of return on my savings account at my local credit union is .153%. The best CD rates in town are under 1.5%. So if I have a nice place to live, can get a tax write off and have my home keep pace with inflation, that’s not such a bad thing. I’ll hope for more, but be glad knowing a home is still a good investment, even if the glory days of rapidly escalating home values are behind us. According to Coldwell Banker Bain Broker Ron Sparks, a home that keeps pace with inflation is by default a nest egg.

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