La visión de The Economist, acerca de diversas mentiras sobre comprar una casa en estos momentos:
The housing market
The seven deadly sins
Nov 27th 2003
From The Economist print edition
It is time to expose some popular fallacies about buying a home
IN 1929 John D. Rockefeller decided it was time to sell shares when even a shoe-shine boy offered him a share tip. During the past week The Economist's economics editor has been advised by a taxi driver, a plumber and a hairdresser that “you can't go wrong” investing in housing—the more you own the better. Is this a sign that it is time to get out? At the very least, as house prices around the world climb to ever loftier heights (see article), and more and more people jump on to the buy-to-let ladder, it is time to expose some of the fallacies regularly trotted out by so many self-appointed housing experts.
One common error is that house prices must continue to rise because of a limited supply of land. For instance, it is argued that “house prices will always rise in London because lots of people want to live here”. But this confuses the level of prices with their rate of change. Home prices are bound to be higher in big cities because of land scarcity, but this does not guarantee that urban house prices will keep rising indefinitely—just look at Tokyo's huge price-drops since 1990. And, though it is true that a fixed supply of homes may push up house prices if the population is rising, this would imply a steady rise in prices, not the 20% annual jumps of recent years.
A second flawed argument is that low interest rates make buying a home cheaper, and so push up demand and prices. Lower interest rates may have allowed some people, who otherwise could not have afforded a mortgage, to buy a home. But many borrowers who think mortgages are cheaper are suffering from money illusion.
Interest rates are not very low in real, inflation-adjusted terms. Initial interest payments may seem low in relation to income, but because inflation is also low it will not erode the real burden of debt as swiftly as it once did. So in later years mortgage payments will be much larger in real terms. To argue that low nominal interest rates make buying a home cheaper is like arguing that a car loan paid off over four years is cheaper than one repaid over two years.
Fallacy number three is a favourite claim of Alan Greenspan, chairman of America's Federal Reserve. This is that price bubbles are less likely in housing than in the stockmarket because higher transaction costs discourage speculation. In fact, several studies have shown that both in theory and in practice bubbles are more likely in housing than in shares. A study by the IMF finds that a sharp rise in house prices is far more likely to be followed by a bust than is a share-price boom.
Safe as houses?
Another curiosity is the popular claim that investing in property is safer than buying shares, for bricks and mortar are here forever. But that says nothing about relative value. Buy at the peak of a property bubble and your investment is not “safe”. To an investor, the value of a house also lies in the rents that a property can generate. If your tenant unexpectedly moves out, you will suddenly find that your income drops to zero.
This leads to a fifth falsehood: it is always better to buy a house, because “paying rent is money down the drain”. Thanks to a growing glut of rental properties in many cities, from Sydney to London, the cost of renting is currently cheaper than the cost of paying a mortgage. Only if (a big if) prices continue to rise does buying always make sense.
Myth number six is that, even if houses are overvalued, their price is unlikely to fall because interest rates will not rise to the double-digit rates that burst previous housing bubbles. Again, the experience of Japan suggests that prices can fall without a big increase in interest rates. All that is needed is a change in sentiment. First-time buyers may balk at sky-high prices, for example, or if rents fall and prices stop rising investors may sell as their expectation of capital gains disappears.
The seventh fallacy is to believe that, even if prices have overshot, they will not fall, but just level off. When inflation was high, real house prices did indeed adjust in this way. But, if inflation remains at 1-2%, it will take years for real house prices to return to normal levels. So today prices are more likely than ever to fall in nominal, as well as real, terms.
Each of these seven arguments may contain a small grain of truth in certain circumstances, but they should never be the articles of faith they have become. The more often they are invoked, the greater the risk that prices are headed for a crash.
The housing market
The seven deadly sins
Nov 27th 2003
From The Economist print edition
It is time to expose some popular fallacies about buying a home
IN 1929 John D. Rockefeller decided it was time to sell shares when even a shoe-shine boy offered him a share tip. During the past week The Economist's economics editor has been advised by a taxi driver, a plumber and a hairdresser that “you can't go wrong” investing in housing—the more you own the better. Is this a sign that it is time to get out? At the very least, as house prices around the world climb to ever loftier heights (see article), and more and more people jump on to the buy-to-let ladder, it is time to expose some of the fallacies regularly trotted out by so many self-appointed housing experts.
One common error is that house prices must continue to rise because of a limited supply of land. For instance, it is argued that “house prices will always rise in London because lots of people want to live here”. But this confuses the level of prices with their rate of change. Home prices are bound to be higher in big cities because of land scarcity, but this does not guarantee that urban house prices will keep rising indefinitely—just look at Tokyo's huge price-drops since 1990. And, though it is true that a fixed supply of homes may push up house prices if the population is rising, this would imply a steady rise in prices, not the 20% annual jumps of recent years.
A second flawed argument is that low interest rates make buying a home cheaper, and so push up demand and prices. Lower interest rates may have allowed some people, who otherwise could not have afforded a mortgage, to buy a home. But many borrowers who think mortgages are cheaper are suffering from money illusion.
Interest rates are not very low in real, inflation-adjusted terms. Initial interest payments may seem low in relation to income, but because inflation is also low it will not erode the real burden of debt as swiftly as it once did. So in later years mortgage payments will be much larger in real terms. To argue that low nominal interest rates make buying a home cheaper is like arguing that a car loan paid off over four years is cheaper than one repaid over two years.
Fallacy number three is a favourite claim of Alan Greenspan, chairman of America's Federal Reserve. This is that price bubbles are less likely in housing than in the stockmarket because higher transaction costs discourage speculation. In fact, several studies have shown that both in theory and in practice bubbles are more likely in housing than in shares. A study by the IMF finds that a sharp rise in house prices is far more likely to be followed by a bust than is a share-price boom.
Safe as houses?
Another curiosity is the popular claim that investing in property is safer than buying shares, for bricks and mortar are here forever. But that says nothing about relative value. Buy at the peak of a property bubble and your investment is not “safe”. To an investor, the value of a house also lies in the rents that a property can generate. If your tenant unexpectedly moves out, you will suddenly find that your income drops to zero.
This leads to a fifth falsehood: it is always better to buy a house, because “paying rent is money down the drain”. Thanks to a growing glut of rental properties in many cities, from Sydney to London, the cost of renting is currently cheaper than the cost of paying a mortgage. Only if (a big if) prices continue to rise does buying always make sense.
Myth number six is that, even if houses are overvalued, their price is unlikely to fall because interest rates will not rise to the double-digit rates that burst previous housing bubbles. Again, the experience of Japan suggests that prices can fall without a big increase in interest rates. All that is needed is a change in sentiment. First-time buyers may balk at sky-high prices, for example, or if rents fall and prices stop rising investors may sell as their expectation of capital gains disappears.
The seventh fallacy is to believe that, even if prices have overshot, they will not fall, but just level off. When inflation was high, real house prices did indeed adjust in this way. But, if inflation remains at 1-2%, it will take years for real house prices to return to normal levels. So today prices are more likely than ever to fall in nominal, as well as real, terms.
Each of these seven arguments may contain a small grain of truth in certain circumstances, but they should never be the articles of faith they have become. The more often they are invoked, the greater the risk that prices are headed for a crash.
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