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Houses aren't investments? Since when?
Chris Hardy considers the suggestion that homes are actually consumer goods


On my way home from the office last night, I was listening to NPR.  Specifically, I was listening to American Public Media's Marketplace. Typically, I really enjoy this program and find the short-form reporting informative, responsible, and objective—you know, journalism.

Midway through the program, on a segment about the latest housing figures, I was reminded why all the banking and finance bozos need a big dose of Dickensian reality checks, complete with Scroogerian visits from the ghosts of recessions' past, present, and future. In response to a reporter's question about when banks will start lending again, the interview subject, Chris Thornberg of Beacon Economics, said, “Banks should be cautious after a bust as scary as the one we saw a few years ago. … Falling prices are good: People don't have to borrow as much. Housing is not an investment. Housing is a consumption good. And on that basis, the cheaper the house, the better off we are as a society. You know, if gas prices are going down, we're all happy about that."

I just about drove off the road, spitting and foaming at the mouth. The NAR would be so proud of my knee-jerk reaction to such blasphemy about the sanctity of home ownership and the American Dream. Owning real estate is not an investment?

It was the glibness of his statement that really stung. He could have preceded the statement with “As if!" or “Duh!" “Like, everyone knows that home ownership is no different than owning a car!" I felt like all that I have learned and professed over the years as a realtor was whisked away like so much dust in the wind. 

Upon reaching my home, I immediately hopped on the computer, Googled this alleged expert, and found that not only is he the founding partner at Beacon Economic, holds a Ph.D in business economics, and is regularly quoted in the media and blah, blah, blah, but I also saw that he serves on the advisory committee for Paulson & Co., Inc. (a Wall Street darling hedge fund). I realized that perhaps his perspective is a bit skewed as far as what constitutes an investment. I realized that what he was doing was an age-old litigation technique of blaming the victim. The banks (which tripped over themselves to throw money at anyone who claimed to be breathing) surely have the right (sic) to be cautious, because now (thanks in part to the banks) housing is nothing more than a glorified consumer good and only the truly worthy should be trusted with such lavish chattel.

I am still of the strong mind that owning real estate is one of the historically best ways for the 99 percent to build wealth in this country (notwithstanding the real estate portfolios of the 1 percent). Sure, it is building wealth through the financial leverage afforded by loans and mortgages, but it is still widely available to a large segment of our population rather than a select or elite few. 

Lending needs to be restrictive, but not punitive or draconian. While I don't agree that real estate is a consumer good, I do believe that a struggling economy needs to gain some momentum. The banks could help drive consumerism by easing the cuffs a bit. Who knows? In 10 years or so, let's see how much those consumer goods are worth!


Chris Hardy is a Broker Associate for Coldwell Banker Residential Brokerage in Fort Collins, Colorado. In 2011 he was named Realtor of the Year by the Fort Collins Board of Realtors.

You can send your feedback to Chris at chris.hardy@coloradohomes.com, and you can visit his website by logging on to www.chrishardyrealtor.com.


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