Well, perhaps real estate is not
always a good investment....
Home prices in the United States fell in October, 2007 for the 10th consecutive month, posting their largest monthly drop since early 1991.
Home prices fell by an average of 6.7% in the S&P/Case-Shiller home price index. The index tracks prices of existing single-family homes in 10 metropolitan areas compared to 2006.
This has me wondering......What would this type of price action do to some one's net worth who had a large proportion of their assets tied up in their home?
(our home is ~74% of our asset base)Well, assuming I was
Joe Average U.S. citizen living in a major metropolitan area:
My last reported net worth would have declined from
$131,011 to $116,606, a decline of over 11%.If I happened to live in
Miami, Florida where house values declined a whopping 12.4% during the same period my net worth would have gone from
$131,011 to $104,351,
a decline of over 20%. That hurts!
Of course I realize that these devaluations are gradual, and not month to month, which is not how I am representing it above but it does have the same net affect. This type of data reiterates why I am trying to diversify away from our over weighting in real estate.
