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Housing No Longer Generates Wealth, Analysts Say

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It's official. Real estate now joins stocks, mutual funds, ETFs, commodities, futures, corporate bonds, bank accounts and jobs on the list of things that no longer build wealth, according to analysts. No, it's true. Just as having a job and putting part of your income in all those other things seems to inevitably result in a loss of capital, so too does putting your money in real estate.

Many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century. Oh well, too bad for us, right? "The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming," the Times says.

Hey, at least we got a college degree out of the thing, and probably some decent tips while working at those humming restaurants!

The article goes on to run down the usual suspects who say housing will never come back -- Stan Humphries, chief economist for the real estate site Zillow, Dean Baker, co-director of the Center for Economic and Policy Research -- but there's at least one optimist in the crowd.

Bob Walters, chief economist of the online mortgage firm Quicken, observes that "you have to live somewhere" and figures “in three or four years, people will resume a normal course, and home values will continue to increase.”

I'm not buying it. The reality is that a "normal course" is not perpetually increasing real estate prices and families that flip houses every time the wallpaper goes out of style. The generation prior to the boom bought homes by putting down 20 percent or more as a down payment and lived in those homes forever.
POSITION:  No positions in stocks mentioned.