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Wall Street Journal’s Nicole Friedman is trying to spin you away fro the best current investment

Posted by John Reed on

“Home prices nationwide, including distressed sales, increased by 13.5% in August 2022 on an annual basis.”
.https://www.corelogic.com/category/intelligence/reports/home-price-insights/#:~:text=Home%20prices%20nationwide%2C%20including%20distressed,2022%20on%20an%20annual%20basis.
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Yay! What a great investment! The only one worth a damn nowadays.
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I publish this as a public service to save you from the mainstream media’s incessant attempts to libel home ownership. The leader of this appears to be the Wall Street Journal’s Nicole Friedman.
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In today’s WSJ, she had an unusually long 29-paragraph anti-home ownership article. The main metric for investors should be home price appreciation rates. You have to get to paragraph 16 to read this about any such metric: There she reluctantly admits, “The median existing home price rose 8.4% from a year earlier...”
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Yay! What a great investment! The only one worth a damn nowadays.
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But in the other 27 paragraphs, Friedman does her best to make you hate home buying as an investment. Her favorite way to spin this great return performance is to talk to you as if you were a Realtor®. They care about how many homes sell a year because they get paid for selling homes. They do NOT make money when YOU make money from home price appreciation. They only make money from deed churn. So don’t become a Realtor®. But the Journal would have you believe this somehow means you should not become a home owner. How does unit sales of homes nationwide matter more to a homeowner than what prices homes are selling for?
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She also touts lower new housing starts. That assumes that you are a home builder. Fewer new housing starts make builders sad, but if you own an existing home, fewer starts are GOOD for your home price.
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She also loves the higher mortgage rates as a way to spin bad housing news. Uh, exactly how high are REAL mortgage interest rates? Today, the nominal mortgage interest rate on 30-year fixed is 6.94%. Subtract the most recent inflation rate of 8.2% and you get a REAL (after adjustment for inflation) mortgage interest rate of 6.94% - 8.2% = -1.26%.
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Is that in Nicole Friedman’s article?
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Ha! Apparently, 28 paragraphs was too few for Nicole Friedman to be able to get REAL and tell you what you need to know as opposed to irrelevant Realtor®/builder news that advances HER anti-home agenda.
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Is this Russian disinformation? No. It is Nicole Friedman negative spin designed to discourage you from buying a home.
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Buy a home with a mortgage. The REAL interest rate is NEGATIVE! Avoiding borrowing when the interest rate is negative is stupid per se.
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Refusing to buy a mortgaged home when appreciation rates are even as low as 1% is crazy. On, say, a $400,000 home, that 1% would make you $4,000.
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And the 8.2% inflation working on your mortgage balance means the REAL mortgage balance will go DOWN from $320,000 to $320,000 x (100% - 8.2%) = $320,000 x 91.8% = $293,760. So your equity will grow from $400,000 - $320,000 = $80,000 to $404,000 - $293,760 = $110,240.
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That is a $110,240 - $80,000 = $30,240 /$80,000 = 37.8% return on investment!
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Why won’t Nicole tell you that? Apparently she wants to get you to put that $80,000 in a 2% money market fund instead. And the WSJ only costs about $100 a year for this mindlessly bad advice.

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