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A scan of the news headlines in newspapers these days could make one sick to their stomach. Though you can find a variety of viewpoints, many are ususally negative especially whent it concerns the economy, the housing market and so on. Though it is not without basis, some times it may be exaggerated. One has to always take the opinion presented in the articles with a grain of salt or assess its value and usefulness for himself or herself.

For example read this recent interview titled ‘U S House Price Decline Could be Worse than Great Depression: Economist Schiller says‘. In this interview the famous economist and MacroMarkets Chief Economist, Robert Schiller presents his analysis of the present situation and states how the house price decline when adjusted for inflation looks much worse. And this report about the ‘U S Oil prices closing at 5-month low on U S gas report‘ states how the reduced consumption of oil and gas by the U S Consumer confirms that the U S economy is in doldrums (Big surprise, huh?).

Read this article from The Economist’s website titled ‘Economics Focus: Home Truths‘ and it talks about how the housing price decline has impacted the credit available to consumers and their spending power. But argues against equating the impact of the so called ‘wealth effect’ from liquid investments such as stocks, bonds, etc with the ‘wealth effect’ from the housing price (not so liquid investment) changes.

The article concludes with the following statement

There is also a more general point that emerges from Mr Buiter’s paper. Very often there is too much emphasis on the losers from falling house prices and too little on the winners. A fall in house prices is not bad for everybody. In an important sense, a house is much like any other durable good: a fall in prices is a boon for those consumers who have yet to buy one.

Speaking of a good opportunity for those who have yet to buy one, read this article titled, ‘Affordable Housing Exists, if you know where to look‘. It lists top-10 Most Affordable Housing Markets. So if you are looking to buy one, this may very well be the golden opportunity you have been waiting for.

Bottomline (in my opinion) is that housing is not an area that people invest in for liquidity. It is a long-term investment and in most cases more than a mere investment, it is the place we call home. So the recent volatility does not really hurt everyone who owns a house. For those that are disciplined and careful and have the liquidity, this may be an opportunity to get in and grow their assets. Having said that, for those that are in need of cash and house is their only remaining source of that cash, the pain is acute and hard, especially since emotions are attached to this investment, more so than other types. It may help them to assess their situation in a non-emotional way (some times it helps to listen to the advise of good friends or a counsellor) and make the right choice that is good for their families and for their wallets in the long-run.

Whatever we do, we should do it while keeping in mind our ultimate goals of a good retirement.