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You Are Naturally Short Housing
Posted: Tue Dec 11, 2012 10:36 am
by Storm
Really insightful article about how we are all born with a short housing position (we all need a place to live):
http://thezikomoletter.com/2012/12/10/y ... t-housing/
It's really more common sense but if people thought about housing in these terms as covering your short position, they would be less likely to do stupid things like borrowing against their hedge.
Re: You Are Naturally Short Housing
Posted: Tue Dec 11, 2012 11:16 am
by MediumTex
Are we short automobiles as well?
Re: You Are Naturally Short Housing
Posted: Tue Dec 11, 2012 11:19 am
by Pointedstick
Language notwithstanding, I think it's a good point. You always need housing, and if real estate rises in value, your cost of housing has increased the next time you need to purchase some. You don't buy your first house for its financial value, but for its use value as a shelter!
Re: You Are Naturally Short Housing
Posted: Tue Dec 11, 2012 11:40 am
by Storm
TennPaGa wrote:
Meh. This is probably just me, but I don't find the "financialization" of language to lend more insight or understanding.
The language might get a little tired, but it helps us to remove emotion from our investing decisions. Housing is a difficult investment to avoid having emotions about. How many stocks would you buy if you actually had to use the product of the company you were invested in? For example, in order to buy some shares of MCD, what if you had to eat McDonalds every day? Housing is one of the few purchases that you are stuck with that is not very liquid, so it helps to think of things in strictly logical, rather than emotional, terms.
Re: You Are Naturally Short Housing
Posted: Tue Dec 11, 2012 12:35 pm
by Pointedstick
I completely agree, Storm. People look at me like I'm batty when I tell them I want my house to be as inexpensive as possible, but I'm sticking to my guns!
Re: You Are Naturally Short Housing
Posted: Tue Dec 11, 2012 1:12 pm
by clacy
Anyone that knows what the word "short" means in a financial setting, or anyone that reads articles like this probably already understands the basic conceptual positives and negatives of home ownership.
Essentially you're preaching to the choir on this one.
Re: You Are Naturally Short Housing
Posted: Wed Dec 12, 2012 12:02 am
by MachineGhost
Hmm, that's a good argument for excluding your house from your PP and net worth. It seems to me the only way you're ever going to get a good deal on housing irregardless of prices is to buy it when undervalued. Not 10% off an overvalued peak, but true fundamental undervaluation.