What would you rather own, bitcoin or a home?
Usually, home values are a lot more stable than the world’s biggest digital currency, and the two assets have traveled in opposite directions recently.
Home prices soared 19.8% in the 12 months through February, according to the Case-Shiller Home Price Index. Bitcoin has slumped 30.1% over the past year.
In any case, 40% of homeowners and renters see cryptocurrencies as a better investment than a home, according to a survey by ConsumerAffairs, a consumer finance guide.
Also, 50% of respondents think stocks are a better investment than a home.
Among home buyers, 44% said they spent more than what they had budgeted for the home, according to the survey. The average over-spend was $10,334.
On the positive side, 73% of homeowners said owning a home increased their self-esteem. On the down side, 29% of homeowners said owning a home has created stress.
Looking at buying a home versus renting, 63% of Generation Z (those born in 1997 and after) would prefer owning; 69% of millennials (those born from 1981-1996) would prefer owning; 72% of Generation X (those born 1965-1980) would prefer owning; and 85% of baby boomers (those born 1946-1964) would prefer owning.
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As for the 19.8% increase in home prices mentioned above, it was the third highest reading in the 35 years of the index.
“That level of price growth suggests broad strength in the housing market, which is exactly what we continue to observe,” Craig Lazzara, managing director at S&P DJI, said in a statement.
Limited Shelf Life
But the price boom may not last.
“The macroeconomic environment is evolving rapidly and may not support extraordinary home price growth for much longer,” he said.
“The post-Covid resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response. We may soon begin to see the impact of increasing mortgage rates on home prices.”
The Fed raised rates 25 basis points in March, and many investors expect at least another 50 basis points in both May and June.
The average rate for 30-year fixed mortgages rose to 5.11% in the week ended April 21, according to housing agency Freddie Mac, the highest level in 11 years.
Meanwhile new single‐family home sales dropped 8.6% in March from February and 12.6% from a year earlier, according to the government.
“A combination of factors has contributed to this decline, including rising interest rates and rising prices, which have both hindered purchasing power for buyers,” Kelly Mangold, a principal at RCLCO Real Estate Consulting, wrote in a commentary cited by Bloomberg.