Tuesday, August 10, 2010

Housing Deemed a "Poor investment"

The Federal Reserve has acknowledged that the "recovery" has slowed.  But whether you're worried about inflation or deflation, Euro Pacific Capital's Senior Economist Michael Pento calls housing a "poor investment."   He says:
Homeowners....love inflation....However, a home is a depreciating asset that holds a significant carrying cost. (Its price) has only traditionally increased at a rate slightly higher than inflation. But interest expenses and the cost of maintaining a home increase with inflation. Therefore, although home prices increase in inflationary environments, it is usually just in nominal not in real terms.
Read the whole article.  (bolding, emphasis = bb)

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