shiller130_Jeffrey GreenbergUniversal Images Group via Getty Images_house market Jeffrey GreenbergUniversal Images Group via Getty Images

Should You Buy a Home in the US?

Even at currently elevated US home-price levels, buying still makes sense for those who are set on ownership. But buyers need to be sure that they can accept what could be a rather bumpy and disappointing long-term path for home values.

NEW HAVEN – A few days ago, I got an email from a man who chastised me for my skepticism about investing in housing today. He identified himself as a former US Air Force pilot during the Vietnam War who subsequently became a stockbroker and banker before retiring recently. “You, as an educated person,” he wrote, “should be helping and promoting the ownership of real estate.”

He was responding to my warning about a bubble in home prices in many places around the world. According to the latest S&P CoreLogic Case-Shiller Home Price Indices, US home prices rose at a record rate of 19.7% in the last year, and now look very unstable. They might increase further for a while, but that may be followed by serious declines.

Still, my correspondent was at least partly right about what I should say to the public about homeownership. In particular, we should recognize its big-picture effect on our lives, despite the recent extreme price volatility.

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