Don't Bet on Building Wealth by Buying a House

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The number of buyers who signed contracts to purchase homes dropped in May to the lowest level on record, a sign the housing recovery can't survive without government incentives.
The number of buyers who signed contracts to purchase homes dropped in May to the lowest level on record, a sign the housing recovery can't survive without government incentives.
AP Photo/Charles Krupa

Before the Great Recession, Americans looked forward to the day when they would purchase their first home. The ultimate symbol of success — home ownership kept the U.S. economy going. It meant having shelter over your family's heads, a nest egg, a way to fund your children's education, vacations — but sadly, that's no longer the case.

The New York Times reports that more than likely, that era is gone for good. When the economy collapsed, homeowners saw values depreciate at a pace like never before. Homes went into foreclosure, and with that their owners dreams collapsed as well.

"There is no iron law that real estate must appreciate," Stan Humphries, chief economist for the real estate site Zillow told the New York Times. "All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn't hold up."

Instead of appreciating as they did in decades past, real estate values will only rise to keep up with inflation. So if you're looking for a sure fire way to make money, don't bet on buying a house. It won't do anything for your future but provide a roof over your head.

  • Ann Binlot

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