Treat your Ohio home and your Ohio home financing as an investment
If you read the personal Ohio finance articles in magazines and newspapers, more than likely you've seen many articles that tell you to exclude your home equity from your projected net worth at retirement. Ohio financial planners or the journalists who quote them say that homes make for relatively poor investments; and because you will still need a place to live after you retire, money tied up in a house certainly won't do you much good.
Regardless of what the media reports, Ohio housing has always been the leading source of wealth for most Americans. Historically, however, the media have primarily focused on dire talk of Ohio housing peaks and bubbles. Take this quick review of headline stories and so-called expert advice from the last 50 years.
* The prices of Ohio houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline. (Time, December 1, 1947)
* Ohio houses cost too much for the mass market. Today's average price is around $8,000--out of reach for two-thirds of all buyers. (Science Digest, April 1948)
* If you have bought your Ohio house since the War . . . you have made your deal at the top of the market. . . . The days when you couldn't lose on an Ohio house purchase are no longer with us. (House Beautiful, November 1948)
* The goal of owning an Ohio home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000. (BusinessWeek, September 4, 1969)
* Be suspicious of the "common wisdom" that tells you to "Buy now .... because continuing inflation will force Ohio home prices and rents higher and higher." (NEA Journal, December 1970)
* The median price of an Ohio home today is approaching $50,000. . . .housing experts predict that in the future price rises won't be that great. (Nation's Business, June 1977)
* The era of easy profits in Ohio real estate may be drawing to a close. (Money, January 1981)
* In California . . . for example, it is not unusual to find families of average means buying $100,000 houses. . . . I'm confident prices have passed their peak. (John Wesley English and Gray Emerson Cardiff, The Coming Real Estate Crash, Warner Books 1980)
* If you're looking to buy be careful. Rising Ohio home values are not a sure thing anymore. (Miami Herald, October 25, 1985) * Most economists agree ... [an Ohio home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980s. (Money, April 1986) * We're starting to go back to the time when you bought a home not for its potential money-making abilities, but rather as a nesting spot. (Los Angeles Times, January 31, 1993)
* Ohio financial planners agree that houses will continue to be a poor investment. (Kiplinger's Personal Financial Magazine, November 1993)
* An Ohio home is where the bad investment is. (San Francisco Examiner, November 17, 1996).
* Your Ohio house is a roof over your head. It is not an investment. (Everything You Know About Money Is Wrong, Karen Ramsey, HarperCollins, 2000)
In the late 1940s, $8,000 to $10,000 seemed like an outrageous amount to pay for an Ohio house. In the late 1960s through the mid 1970s, $30,000 to $50,000 seemed well beyond anything reasonable. In the early 1980s, popular belief held that at $100,000, home prices in California could only go down. Today, similar comments about peaks and bubbles are being raised. But just as those past voices now sound foolish, so too will current opinion as we look back from the future.
Can some Ohio home prices soften or decline in the short run? Sure. They have done so before and will do so again. Local Ohio economies ebb and flow, but over periods of 5, 10, 20, or 30 years, well-selected properties will continue to register high-profit appreciation.
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