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Opinion
Barry Ritholtz

Hating Homeownership

The perception that housing is a bad investment is influenced too much by recent events.
It's just a matter of time before the love affair resumes.  Photographer: Patrick Fallon/Bloomberg
It's just a matter of time before the love affair resumes. Photographer: Patrick Fallon/Bloomberg

U.S. homeownership falls to the lowest levels in almost 20 years, blared the headlines. Lots of articles explained "Why Your Home is Not a Good Investment" and why Americans think owning a home is better for them than it is. It seems that America's former love affair with real estate is over.

Blame the recency effect. People have a disconcerting tendency to give more weight to what just happened than long-term trends. This is why the monthly jobs report, a very rough estimate, has such an outsize impact on the markets. This same effect is what is driving people toward renting over buying.