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Home sweet home, maybe

August 24, 2008

Re "Loving your house again," Opinion, Aug. 17

In Chris Ayres' fantastical commentary from Cloud Cuckoo Land, he labors hard to make a case for feeling good about buying overpriced housing in recent years. But his bedrock assumption -- that consumer price inflation will save the day -- is fatally flawed. In case the author hadn't noticed, home prices in Los Angeles are not keeping pace with inflation.

The latest Case-Shiller index of home values shows that prices in Los Angeles decreased by 24.5% between May 2007 and May 2008. The value of a mortgaged house is deflating much faster than the debt used to finance it -- not pretty.

But a conservative investor -- just the type who guessed that housing was in a bubble and sold before it burst -- could have put sale proceeds into safe California municipal bonds and would now be beating inflation.

It's fine to want to encourage homeownership in general, but to promote it as a sure-thing investment -- at any cost -- based on future appreciation (or inflation) is just irresponsible.

Jon Jordan

Venice

Kudos to Ayres for penning a cogent, well-reasoned analysis of the long-term benefits of homeownership for those of us "unfortunate" enough to have bought near the top of the recent real estate boom.

Compared with the breathless reports of doom and gloom that we see almost daily on the countless 24-hour news channels and in the pages of business sections across America, Ayres offers a unique point of view: The reasons to own your own home are the same as they have ever been.

Long-term asset appreciation, tax benefits (thank you, Uncle Sam) and the availability of credit at moderate rates make buying a home in the United States as smart as ever. Unless you're a speculator looking for a fast profit, or unfortunate enough to be forced to move for family or economic reasons, then go ahead -- buy into the American dream and sign those mortgage papers.

Steve Young

Newbury Park

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