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First quarter investments, home prices vs stocks, gold, oil

If you thought housing was a bad investment and chose not to buy because you felt home values were declining, check out how your money might have done with these investments during the first quarter of 2008 (certainly the bad news in the housing, mortgage and credit markets contributed to negative returns in stocks so far this year).

  • Gold +10%
  • Crude Oil +5.8%
  • Dow -7.6%
  • Nasdaq - 14%
  • S & P - 10%
  • Hang Seng -18%
  • Nikkei -18%
  • DAX -19%

First quarter winners and losers courtesy of MarketWatch. 

Charleston South Carolina real estate declined on a median basis by 3.91% from February 2007 to February 2008 (that's for a full year, not the past quarter). Buying a home is much more than a financial investment (consider that everyone requires shelter and how you value your personal level of comfort when owning vs. renting - intangible to be sure but I have owned and rented at various times in my life and frankly, I'm much more comfortable owning my home today than I would be as a tenant.) And as I'm preparing to send a little check (well, it's not too big but anything more than a dollar is not a little check) to Uncle Sam for the balance due on my income taxes, there are also tax advantages to consider (please consult your accountant).

Owning a home should be put into proper perspective. It is not the absolute equivalent to catching a falling knife today. 

Published Monday, March 31, 2008 5:48 PM by Howard Arnoff

Comments

# re: First quarter investments, home prices vs stocks, gold, oil

Real estate is not quite as liquid as the investments listed...just ask the 10,000 people trying to sell their homes in the Charleston market.  Also, when you sell your home expect to loose 5% - 6% in commissions.

So let's do the math; if you bought a 500k in house in 2007 that house in now worth -3.9% (19k) less in 2008.  If you sell it you'll need to subtract another 5% (24k) for commission.  You just lost $43,000.

Any idiot could make $$$ buying real estate in the past few years, but the easy money days are over for now.  If you plan to stay in your home for 5+ years now can be a good time to buy...but you need to work with a good realtor and buy smart.  

Monday, March 31, 2008 8:52 PM by Claude Daigle

# re: First quarter investments, home prices vs stocks, gold, oil

Claude, no reason to be so harsh on homeowners who buy for all the right reasons, not the wrong reasons. Anyone who buys and sells in one year is not buying for the right reasons and if it is a job transfer that causes them to have to sell in that short a period of time, corporate relocation departments generally help them out financially.

As to liquidity, of course homes are not quite as liquid but many of my stocks didn't feel very liquid during the early 2000's. Unless liquid was the blood on my monthly statements.

Once again, as I mentioned in the post, I have rented and I have owned. If people are going to rent for fear of losing a little money on the value of their investment in their home, they're wrong and they are buying for the wrong reasons.

Sure, the "easy" money is over, but over time, homes like stocks have historically and traditionally risen in value. This time won't be an exception.

Tuesday, April 01, 2008 5:31 AM by Howard Arnoff
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