Once upon a time a big wind flattened the flimsy homes made of sticks and straw that had been ruining the neighborhood. The gentry moved in and property values went up. The third little pig, with the house of brick, grew fat and prospered. He took a second mortgage and then a third. He thought he could live on his house for the rest of his life. Next thing he knew, the wolf was at the door.
In 2006 the housing bubble popped. Prices went down. Home equity melted away. People started to worry that owning a home would no longer raise their standard of living. For this (we asked ourselves), we’re cleaning the gutters, painting the shutters, paying the taxes, and feeling broke?
Most likely, we won’t see a housing boom again for many, many years. Price appreciation will revert to “normal”: slow annual gains, roughly tracking the general inflation rate. As an investment, stocks will probably outperform homes. But so what? A home of our own is still the rock on which our dreams are built. It’s a state of mind, our piece of the earth, the place where a family’s toes grow roots. It’s where the flowers are ours, not God’s.