With all the real estate transactions happening and with so many agents talking about what a "hot market" we have in the GTA, the title of this article has to raise a few eyebrows.

An article in Slate Magazine suggests that home ownership causes unemployment. His point is simple: Once people own homes, they develop ties to the community and are hesitant to move. People who believe they will be better off will sell their homes and rent in the new community. Those who are not confident that they will find new work elsewhere will stay where they are.

Another article from MSN points out that renting increases wealth. The author looks at returns from the stock market and the returns from home ownership and concludes that over the long term, one would be better off renting and putting the money that would have gone into purchasing the home towards stocks. And yet another article from MSN talks about why individuals shouldn't purchase homes.

Some people buy property solely for investment and other will buy for personal use, looking to make cash when they decide to move elsewhere. The two above mentioned articles are well-reasoned and point out flaws in real estate investing. In my observations, I felt that real estate investing grew exponentially after the collapse of the dot-com bubble due to the public's lack of confidence in the stock market. There was also a rise in LCBO profits, but I don't know if that had anything to do with the dot-com era.

With the recent troubles of the US housing market, lenders have been using every possible avenue to assist borrowers. Does this make real estate the new dot-com stocks? Will people begin flocking back to stock market investments?

I'm not a financial consultant or planner, and I can't give advice about what is or isn't a good investment, but there's no doubt that home ownership will continue, and that many renters will continue to save to purchase their own homes. The question is will people continue to buy property as they do now, or will we hit something like the early 1990s again in the near future.

It's strange that MSN suggests avoiding home ownership when they published an article about how the declining US dollar makes it a prime time to purchase real estate trusts. Granted, the author is looking at it from a larger scale standpoint and notes that trusts have a more diversified portfolio, but the returns of the investment are still tied to real estate, which, according to MSN, aren't as lucrative. Similarly,  MSN also notes that the market is turning a blind eye to warning signs of a stock collapse.

So on one hand, MSN suggests that you should rent and put your money into other investments, like real estate trusts, but that there may be a loss in market value because analysts are ignoring warning signs? This sounds more complex than a plan concocted by a James Bond villain. Seeing as how no one solution can fit every person, I'd suggest that for more information on how to use your money, you speak with a financial planner or consultant. They have the expertise to help you determine a plan that will suit your particular circumstance.

        

 

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