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Archive | January, 2012

A Little More on Wealth Accumulation and Homeownership

Today, we are honored to have Ken H. Johnson, Ph.D. — Florida International University (FIU) and Editor of the Journal of Housing Research as our guest blogger. To view other research from FIU, visit – The KCM Crew

Last week’s posting (Creating Wealth Through Homeownership – The Proof) concentrated on how homeowners, on average, accumulate more wealth than renters. The gist of the posting was that, in an environment where most do not save, homeownership creates a “forced piggybank” for owners through amortization of their mortgages and prepayment of principal. This conclusion comes from ongoing research being conducted by Beracha and Johnson.[i]

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What Does Warren Buffet Think About Buying A Home?

Warren Buffet is seen by many as the greatest investor of our time. When he speaks, people listen. Like anyone else in his position of influence, he is criticized by some for using his bullhorn to promote his own business agendas at times. That makes it very interesting when we occasionally learn of how he privately advises those closest to him.

Such a situation occurred this week. Debbie Bosanek, Warren Buffet’s secretary of 37 years, recently purchased a second home in Surprise, Arizona.

In an article in the Omaha World Herald, Mrs. Bosanek discussed her reasons for purchasing a second home and the personal advice she received from Mr. Buffet.

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Where Are People Moving To and From?

For a larger version, click on the image.

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Why Deals Die

I have seen estimates stating that 29% of deals that go to contract and require a mortgage, don’t close. That number boggles my mind. It means that even after a buyer and seller come to terms on a sale (not an easy feat these days), 3 out of 10 transactions fall apart. What are some of the more common reasons?

  • Appraisal issues – In many markets, we are still seeing declining values. Appraisers are in a difficult position, and with so many transactions (including seller’s concessions to assist buyers with closing costs) values aren’t always coming in at sales prices.
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Another Bear Turns Bullish on Real Estate

Two weeks ago, we posted When the Prophet Says Buy – BUY! In that post, we explained that a major bear on housing, John R. Talbott, is now bullish on the real estate market. Last week, another bear turned bull.

Chris Thornberg, a former UCLA economist and a founding principal of Beacon Economics, was very skeptical of the housing market in 2007.

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