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Wall Street Journal again claiming homes are in a slump when they went up 3.9%

Posted by John Reed on

More attempts to discourage home buyers in the Wall Sreet Journal today by their reporter Nicole Friedman.
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The usual nutty logic.
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Basically, principal residences are good investments because they appreciate in value, provide you with a place to live, and have two dozen structural advantages not available to owners of other assets, even an identical house across the street that is rented to a tenant.
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Nicole says "home sales have slumped this year."
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Home prices?
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No.
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Home Sales. Unit sales. Realtors® got fewer commissions. Why is she telling us that? What the hell do people who are not collecting money at home settlements care about the income of Realtors® and title clerks?
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They don't. But it's a way to cast aspersions on buying a home. Why is the Journal hellbent on that for the last couple of years? I don't know. They seem to think if an asset is not sold by licensed securities dealers it is not an investment.
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My response is that most of the net worth of most American seniors is their home equity. To the Journal, the BEST investment is a non-investment.
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Nicole admits in the article that home prices rose 3.9% over the last twelve months according to the Realtors®. We are making progress though. Nicole used to bury that in paragraph 38. Today that hated admission is in paragraph 4.
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She always commits a journalistic mistake known as burying the lead. She is also misleading the reader. The lead (first sentence and headline) really is: “In spite of high mortgage interest rates, home prices are still rising in contrast to the stock market or the market for existing bonds in the last two years.”
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Then she adds "[Home] Prices aren't adjusted for inflation."
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NOT ADJUSTED FOR INFLATION!? Homes are a hedge against inflation! If you want to adjust home values of leveraged fixed-rate mortgaged houses for inflation, you need to adjust EVERY number from interest rates to mortgage payments to mortgage balances for inflation. I often do that here. That reveals the power of leverage combined with inflation which is acting not only on home values (up) but also on real mortgage balances (down).
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Go ahead, Nicole. Make my day. Adjust the home prices, mortgage interest rates, mortgage payments, and mortgage balances for inflation. If you just adjust home prices for inflation, you are committing an apples-and-oranges, intellectually-dishonest argument tactic.

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