If you're going to live in a home for a decade or more, it often makes sense to buy rather than rent. But don't expect an investment windfall from your purchase, says Nobel laureate economist Robert Shiller of Yale University.
"Ten years from now, there could be another housing boom or bust. But since 1890, the average appreciation of inflation-corrected home prices in the United States has been only one-third of 1 percent a year," he writes in The New York Times.
"That’s why housing hasn’t been a great investment. And in 10 years, it may be almost equally likely that real home prices will be higher or lower than they are today."
The S&P Case-Shiller home-price index for 20 cities rose 4.9 percent in the 12 months through September, the smallest increase since October 2012.
Given the uncertain investment return on a home, you may want to look closely at maintenance costs and "whether you’re committed to staying in one neighborhood and, maybe, at a nearby job," Shiller writes.
Economists have mixed views toward the housing market, with some less worried than others about the recent slowdown.
"You’re getting to a market that’s a little bit healthier, it isn’t subject to these boom-bust cycles," Thomas Simons, an economist at Jefferies, told Bloomberg.
"I view the market as generally being in the process of stabilizing. When prices are stable, the market functions a little better."
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