DWCAP – I was not suggesting that anyone should go buy real estate now. The OP sounds like a worried home owner, and I just pointed out that if someone is really worried about inflation – well real estate is a traditional inflation hedge. It has worked really well in that capacity for thousands of years.
For me and my unique situation, buying last year made sense, and still does. The ability to open a decent size dollar short position with no carrying costs is just great. The house is cool, and is a long term luxury. I don’t much care what valuation does over the next 15 years. My son will inherit our beach house some day, it will likely never be sold.
I am not following your ideas on “non-productive” investment. Are there thousands upon thousands of empty homes somewhere? For the few (in percentage terms) that are empty, will not a growing population soak that up pretty quick? If not, don’t we need a ton of new construction every year just to replace old homes that are torn down or converted to coffee shops or whatever? And since homes are long lived assets, even if a few extra were built the last three years won’t they eventually find a good use? I mean really, its not like we just built 1 million homes that will be empty, never-lived-in and rotting away 5 years from now, right? New home supply may have gotten ahead of its self a little, but, IMHO it is nothing like the valuation overhang we have.
