According to the New York Times, we're not going to make a profit on houses for another 20 years. My sister and her husband hit the market perfectly. They bought a home for $220,000 in the early 90s, and three years later, it was worth double the price. Steve and I bought a home four years after they did. After all of our renovations, we would probably break even on our home, if we had to sell today. Home prices haven't plummeted around here, like they have in other parts of the country, but they did take a hit.
If people stop looking at their homes as investments, what's the long term impact? Less home renovations, for sure. Fewer McMansions, as people put their resources into the stock market rather than into luxury homes. What else?