本文发表在 rolia.net 枫下论坛Reader: Would it be better to take advantage of historically low mortgage rates and buy a new house (as a first-time buyer) at historically high prices rather than waiting for the housing bubble to pop and risking higher interest rates? Is it possible for the housing bubble to pop without rates climbing dramatically?
Also, even though housing prices are extremely high (in some markets) relative to the recent past, aren't those prices actually misleading due to the drop in the dollar? In other words, would historically low interest rates coupled with a much weaker dollar than a few years ago actually make the apparent high house prices actually cheaper then they appear? Would it be possible to realize a savings on the purchase of a house based on the depreciation of the dollar "in reality" through hedging, etc.?
-- J.F.
Howard Simons: Housing can be viewed as a bond whose implied coupon is the rental payments avoided over time of ownership less the foregone investment income on the down payment and the considerable holding costs of operation, maintenance and taxes. Housing has some measure of inflation protection and in the case of a fixed-rate mortgage, protection against rental increases.
It is something of an illusion to speak of housing appreciation. The structure itself can only depreciate; the land can acquire or lose some measure of scarcity value or location premium. Moreover, the replacement cost of housing, the next place you are going to live, also is rising in price.
Rents have been falling in many markets as many tenants have become first-time homeowners. This must place downward pressure on the economics of owning, and any increase in mortgage interest rates would have an immediate and decidedly negative affect on housing prices. Offsetting these risks is the prospect, yet to materialize, of higher inflation, against which renters have no protection beyond the terms of their lease.
Can housing prices fall without higher interest rates? Absolutely: All that is necessary is for enough buyers at the margin to remain tenants. In addition, any economic weakness that lowered the pool of potential buyers could lower both housing prices and interest rates simultaneously.
What is the relationship between housing and the dollar? Housing prices strengthened and the dollar weakened as the result of lower short-term interest rates. Viewed in this light, a given parcel of American real estate is now a weaker claim on foreign goods and services. As much as housing prices have risen, returns on non-dollar bonds have risen more, but this is a disingenuous comparison: You have to live somewhere, but you do not have to own bonds.
Hedging American real estate by trading the dollar presumes that any downturn in real estate prices will be the result of higher interest rates, which may or may not lead to a stronger dollar: If foreign rates rise more, the dollar could weaken while real estate prices collapse, and that would be a most unpleasant combination for the hedger.
Over long periods of time, home ownership has proven to be a wise investment by virtue of inflation protection and the ability to fix payments in a fixed-rate mortgage. You have no protection against higher taxes and maintenance costs as either an owner or tenant. The best advice always has been to own if you are planning to live in a place for more than five to seven years, and to rent otherwise.更多精彩文章及讨论,请光临枫下论坛 rolia.net
Also, even though housing prices are extremely high (in some markets) relative to the recent past, aren't those prices actually misleading due to the drop in the dollar? In other words, would historically low interest rates coupled with a much weaker dollar than a few years ago actually make the apparent high house prices actually cheaper then they appear? Would it be possible to realize a savings on the purchase of a house based on the depreciation of the dollar "in reality" through hedging, etc.?
-- J.F.
Howard Simons: Housing can be viewed as a bond whose implied coupon is the rental payments avoided over time of ownership less the foregone investment income on the down payment and the considerable holding costs of operation, maintenance and taxes. Housing has some measure of inflation protection and in the case of a fixed-rate mortgage, protection against rental increases.
It is something of an illusion to speak of housing appreciation. The structure itself can only depreciate; the land can acquire or lose some measure of scarcity value or location premium. Moreover, the replacement cost of housing, the next place you are going to live, also is rising in price.
Rents have been falling in many markets as many tenants have become first-time homeowners. This must place downward pressure on the economics of owning, and any increase in mortgage interest rates would have an immediate and decidedly negative affect on housing prices. Offsetting these risks is the prospect, yet to materialize, of higher inflation, against which renters have no protection beyond the terms of their lease.
Can housing prices fall without higher interest rates? Absolutely: All that is necessary is for enough buyers at the margin to remain tenants. In addition, any economic weakness that lowered the pool of potential buyers could lower both housing prices and interest rates simultaneously.
What is the relationship between housing and the dollar? Housing prices strengthened and the dollar weakened as the result of lower short-term interest rates. Viewed in this light, a given parcel of American real estate is now a weaker claim on foreign goods and services. As much as housing prices have risen, returns on non-dollar bonds have risen more, but this is a disingenuous comparison: You have to live somewhere, but you do not have to own bonds.
Hedging American real estate by trading the dollar presumes that any downturn in real estate prices will be the result of higher interest rates, which may or may not lead to a stronger dollar: If foreign rates rise more, the dollar could weaken while real estate prices collapse, and that would be a most unpleasant combination for the hedger.
Over long periods of time, home ownership has proven to be a wise investment by virtue of inflation protection and the ability to fix payments in a fixed-rate mortgage. You have no protection against higher taxes and maintenance costs as either an owner or tenant. The best advice always has been to own if you are planning to live in a place for more than five to seven years, and to rent otherwise.更多精彩文章及讨论,请光临枫下论坛 rolia.net