By allowing ads to appear on this site, you support the local businesses who, in turn, support great journalism.
Your Views: Housing remains a good investment for the long term
Placeholder Image

Relay for Life

To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video

Letters policy: Send by e-mail to (no attached files, please, which can contain viruses); fax to 770-532-0457; mail to The Times, P.O. Box 838, Gainesville, GA 30503; or click here for a form. Include full name, hometown and phone number for confirmation. They should be limited to one topic on issues of public interest and may be edited for content and length (limit of 500 words). Letters originating from other sources, those involving personal, business or legal disputes, poetry, expressions of faith or memorial tributes may be rejected. You may be limited to one letter per month, two on a single topic. Submitted items may be published in print, electronic or other forms. Letters, columns and cartoons express the opinions of the authors and not of The Times editorial board.

Readers are invited to submit letters pertaining to key issues and general observations concerning the election campaigns. However, we will not publish letters or submissions that directly endorse or criticize candidates for state or local offices, nor submissions from the candidates or their representatives.

It's no secret that housing has been through a tough period. The turbulent economy of the past few years has led to some fundamental misconceptions about how real estate works as an investment, along with a loss of confidence in the value of home ownership.

It's time to restore some perspective.

Historically, real estate prices track closely with the rate of inflation. Unfortunately, the last 10 years led many to believe that real estate "should" appreciate at 5 percent to 10 percent per year, or more.

Because all real estate must be affordable for the people who live there, whether tenants or owners, such rates of appreciation are rarely sustainable. We've seen recently what happens when prices lose touch with their fundamentals.

The good news is that, in the aggregate, prices have returned to their long-term baseline. Because everyone has to live somewhere, demand for housing grows steadily over time.

Once today's relatively high inventories are worked down, most economists predict housing will resume its slow, steady appreciation rate. With slow appreciation, housing remains one of the safest long-term wealth builders there is.

Consider the illustration. At 2 percent annual appreciation, a homeowner with 20 percent down and a 30-year mortgage will have almost 30 percent more equity after five years than a tenant who invests the same down payment in stocks at 8 percent annually.

More importantly, at low appreciation rates, prices generally are not volatile. If policy makers can avoid a repeat of the reckless lending of the last decade, we should once again be able to rely on the value of our homes over the long run.

We're very lucky to live in North Georgia. On average (with some exceptions), our housing prices have only fallen about 5 percent from the peak.

At today's record low interest rates, buyers with a long-term view have a tremendous opportunity. If you focus on future fundamentals rather than the distorted market of the recent past, you'll see there's rarely been a better time to become a homeowner.

Frank K. Norton Jr.

Regional events