Americans Are Wrong to Think Homes Will Make Them Rich

On Tuesday's MarketFoolery, host Mark Reeth, along with Million Dollar Portfolio analyst Michael Olsen, and Motley Fool One analyst Morgan Housel, discussed the slowdown of home prices.

Mark explained the S&P/Case Shiller 20-City Composite Home Price Index suggests slower-than-expected growth in home prices. Morgan believes the slowdown was inevitable because of inflation. Michael indicates that home buyers are obtaining lower interest rates and, because of this, are able to purchase larger homes, which inevitably pushes up home prices. Michael offers that home buyers should look at their home for the long term because interest rates will move up, which will reduce affordability and then the long-term price-to-income ratio will take hold. Yet he also explains that the 20-City Index is affected by averages. Additionally, he also finds the consumers in this market are younger, underemployed, and are burdened by debt, so he expects to see these numbers continue to go down.

Then, Mark asks if Michael or Morgan would move to Detroit as housing prices are ridiculously low. Morgan and Michael dive into the benefits and major disadvantages of buying and relocating to Detroit.

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  • Report this Comment On June 29, 2014, at 1:10 PM, Silverlining wrote:

    It always mystifies me why the fact that you MUST have shelter is never considered in the cost benefit of owning a home. Granted, buyers should look down the road, buy only what they need and consider the location now and the likelihood that it will remain desirable in the future. Next, maintain your home so that if you are ever in need of a quick sale you are more likely to be able to get one. Even if you only get the money you paid initially out of the property, you will have lived for free and you most likely prefer to live somewhere. In all things moderation including the house you choose to make your home.

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