Product Description

"This book couldn't be timelier. With hundreds of thousands of Americans expected to lose their homes because they took out mortgages beyond their ability to pay, it is clear that home buyers need assistance--beyond the reassurance of the mortgage broker trying to close the deal and get his commission. This book, written in an easily accessible manner, provides that assistance; it lays out the economics of buying, owning, and financing a home." --Joseph Stiglitz, Columbia University, 2001 Nobel Prize in Economics "The purchase of a home is the most significant investment decision confronting nearly all adults. Yet sound advice, untainted by the self--interest of real estate and mortgage brokers, is extremely scarce. In Houseonomics, the Smiths provide simple and understandable answers to the vexing questions surrounding homeownership, making it a valuable resource for anyone serious about their financial future." --Bryan White, Managing Director, BlackRock "Houseonomics offers great insights about how to think about homeownership. Its approach is innovative, but the analysis is grounded in common sense.A useful primer for what is the most important investment most people make in their lives. " --Paul Efron, Retired Partner and Advisory Director, Goldman Sachs & Co. "This book is a common sense response to those who question the value of homeownership. The Smiths validate the argument that homeownership is normally a key component of lifelong wealth building. They present a practical guide to basic financial analysis for those planning on owning a home or who currently own a home." --Doug Duncan, Chief Economist, Mortgage Bankers Association "There is a lot of wisdom in Gary and Margaret Smith's Houseonomics regarding the biggest investment that most people ever make. It is so well written that reading it is a joy and yet almost everyone can gain valuable knowledge in the process. The time you take to read this book will be a smart investment indeed. Having taught economics at Stanford for 35 years, I can only wish that more authors were as knowledgeable as the Smiths and wrote this well." --John B. Shoven, Stanford University, co-author with Secretary George P.Shultz, Putting Our House in Order: A Guide to Social Security and Health Care Reform "The "Home Dividend" is a powerful concept and, indeed, an engine for prosperity. " --Ed Yardeni, President, Yardeni Research For generations, buying a home has been the best investment Americans could make. But, now, some so-called "experts" claim that it's foolish to be a homeowner. They're wrong. Houseonomics explains why a home is still an excellent investment for most people in most places!and helps you make smarter housing decisions wherever you are. This book isn't for aspiring slumlords or flippers: It's for anyone who wants to move toward financial security, with a roof over their heads, and a home to call their own. You won't find "too good to be true" schemes here: You'll find a sensible, intelligent, and totally up-to-date explanation of the real economics of homeownership. Discover how to develop an achievable vision for financial prosperity via homeownership, and treat housing decisions as the investment decisions they really are. Then, learn how to negotiate more effectively when purchasing, selling, financing, refinancing, or remodeling; decide whether to prepay your mortgage!even intelligently evaluate rental/vacation properties.It's never been more important to get clear-headed, sensible, objective advice on homeownership--and that's exactly what Houseonomics delivers. /Your home: an investment, not a speculation Understanding and calculating your "home dividend" /Why now is still a good time to own a home Even if home prices don't increase in the coming years /Choosing the right house--and the right mortgage Sensible advice that cuts through the lies, hype, and fear /Refinancing, home equity loans, and remodeling The right ways to make the right decisions

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Product Details

• Amazon Sales Rank: #1116900 in Books
• Published on: 2008-05-01
• Original language: English
• Number of items: 1
• Binding: Paperback
• 240 pages

From the Back Cover

“This book couldn’t be timelier. With hundreds of thousands of Americans expected to lose their homes because they took out mortgages beyond their ability to pay, it is clear that home buyers need assistance—beyond the reassurance of the mortgage broker trying to close the deal and get his commission. This book, written in an easily accessible manner, provides that assistance; it lays out the economics of buying, owning, and financing a home.”

–Joseph Stiglitz, Columbia University, 2001 Nobel Prize in Economics

 

“The purchase of a home is the most significant investment decision confronting nearly all adults. Yet sound advice, untainted by the self—interest of real estate and mortgage brokers, is extremely scarce. In Houseonomics, the Smiths provide simple and understandable answers to the vexing questions surrounding homeownership, making it a valuable resource for anyone serious about their financial future.”

–Bryan White, Managing Director, BlackRock

 

“Houseonomics offers great insights about how to think about homeownership. Its approach is innovative, but the analysis is grounded in common sense. A useful primer for what is the most important investment most people make in their lives.”

–Paul Efron, Retired Partner and Advisory Director, Goldman Sachs & Co.

 

“This book is a common sense response to those who question the value of homeownership. The Smiths validate the argument that homeownership is normally a key component of lifelong wealth building. They present a practical guide to basic financial analysis for those planning on owning a home or who currently own a home.”

–Doug Duncan, Chief Economist, Mortgage Bankers Association

 

“There is a lot of wisdom in Gary and Margaret Smith’s Houseonomics regarding the biggest investment that most people ever make. It is so well written that reading it is a joy and yet almost everyone can gain valuable knowledge in the process. The time you take to read this book will be a smart investment indeed. Having taught economics at Stanford for 35 years, I can only wish that more authors were as knowledgeable as the Smiths and wrote this well.”

–John B. Shoven, Stanford University, co-author with Secretary George P. Shultz, Putting Our House in Order: A Guide to Social Security and Health Care Reform

 

“The “Home Dividend” is a powerful concept and, indeed, an engine for prosperity.”

–Ed Yardeni, President, Yardeni Research

 

For generations, buying a home has been the best investment Americans could make. But, now, some so-called “experts” claim that it’s foolish to be a homeowner. They’re wrong. Houseonomics explains why a home is still an excellent investment for most people in most places…and helps you make smarter housing decisions wherever you are.

This book isn’t for aspiring slumlords or flippers: It’s for anyone who wants to move toward financial security, with a roof over their heads, and a home to call their own. You won’t find “too good to be true” schemes here: You’ll find a sensible, intelligent,  and totally up-to-date explanation of the real economics of homeownership.

Discover how to develop an achievable vision for financial prosperity via homeownership, and treat housing decisions as the investment decisions they really are. Then, learn how to negotiate more effectively when purchasing, selling, financing, refinancing, or remodeling; decide whether to prepay your mortgage…even intelligently evaluate rental/vacation properties.

It’s never been more important to get clear-headed, sensible, objective advice on homeownership—and that’s exactly what Houseonomics delivers.

 

•Your home: an investment, not a speculation
    Understanding and calculating your “home dividend”

•Why now is still a good time to own a home
    Even if home prices don’t increase in the coming years

•Choosing the right house—and the right mortgage
    Sensible advice that cuts through the lies, hype, and fear

•Refinancing, home equity loans, and remodeling
    The right ways to make the right decisions 

About the Author

Dr. Gary Smith is the Fletcher Jones Professor of Economics at Pomona College in Claremont, California and is affiliated with the Financial Economics Institute at Claremont McKenna College. He has published eight college-level textbooks, over 60 research papers, eight educational software programs, and is a noted public speaker. He has received national and international recognition in the media. His research has been featured in various media venues including The New York Times, the Wall Street Journal, The Motley Fool, Newsweek, and BusinessWeek. He has been interviewed on CNBC and was a keynote speaker at the Brookings Institution in Washington D.C. and the Mortgage Finance Industry Summit in New York City. He received his B.A. in Mathematics with Honors from Harvey Mudd College and his Ph.D. in Economics from Yale University.

Dr. Margaret Smith is President of Smith Financial Place, an independent financial planning coaching firm that provides holistic, comprehensive financial planning and life coaching services for its clients. She does not sell products or manage assets, but rather focuses on providing objective advice and coaching. She is a Certified Financial Planner^TM, a Registered Invest-ment Advisor, a member of the Financial Planning Association, and a Certified Integral Coach^TM through New Ventures West. Margaret received a Ph.D. in Business Economics from Harvard and a simultaneous B.A./M.A., summa cum laude, in Economics from Yale. She has published various articles on real estate and finance.

 

Excerpt. © Reprinted by permission. All rights reserved.

Praise for Houseonomics

"The Smiths have done their homework, and with their new book you can do yours too—on what, for most families, is the most important investment people ever make. Their careful analysis takes account of important elements of the housing decision that even most so-called professional advisers overlook. And their writing is clear and easy to understand. Their book should help millions of American families."

—Benjamin M. Friedman,
William Joseph Maier Professor of Political Economy, Harvard University,
Author, The Moral Consequences of Economic Growth

"Houseonomics provides the most intuitive framework for understanding the power of real estate investing. It is a great toolkit for first-time homeowners and seasoned real estate investors."

—Matt Thompson, Director of Business Development,
Sony Pictures Television International

"Recent studies show that more than 98% of all homeowners had gains in the purchase of their home if they have owned it more than five years. The numbers drop measurably for those who have owned for less than two years. Houseonomics is among the first books to inform current and future homeowners that owning a home should never be seen as a short-term speculative investment, but rather a sound long-term one. This is a simple to read but powerful reminder of the benefits of homeownership along with useful tips on how to navigate through the process of buying and selling."

—Steve Murray, Editor, REAL Trends,
Coauthor, The Consumer Tsunami

"Houseonomics is packed with insights for anyone who owns a home or is thinking about buying a home. The "Home Dividend" is an original and invaluable way of thinking about homes. Houseonomics opened my eyes; it will open yours too."

—Chris Dialynas, Managing Director,
Pacific Investment Management Company (PIMCO)

"Housenomics is essential reading for anyone considering purchasing a home. It explains why owning a home is the best investment most Americans will ever make, and clearly lays out in everyday language and easy-to-follow numerical examples all of the financial principles associated with the purchase and sale of residential real estate. The book answers questions such as how to pick the best mortgage, how much money one saves by owning rather than renting, whether remodeling is a good economic investment, how tax breaks, leverage and compounding work together to make homeowners rich, and how to decide if a vacation home can be a good investment. World class economists Gary and Margaret Smith give readers the knowledge and confidence to ignore tainted advice from real estate agents or mortgage brokers and instead make informed decisions that are in their best interest."

—Mike Schimmel, Managing Director,
Kayne Anderson Capital Advisors, L.P.

"No one explains the economics of the rent vs. buy decision as clearly as the Smiths. If you are looking to purchase a home, consider Houseonomics your 'House Buying 101.' A must read."

—Jeff H. Ellis, CFA, Portfolio Analyst, Western Asset Management

"Few investors treat housing with this level of thoughtfulness and depth. Houseonomics offers an invaluable perspective on housing as an asset with returns that can be calculated and evaluated when considering home ownership and long-term personal portfolio management."

—Kristin Horne, Principal, TPG Capital

"When it comes to houses, Americans suffer from a collective bipolar disease. In our manic state, we rush out in droves to buy houses before someone else does. In our depressive state, we hide our eyes when passing a 'For Sale' sign. This book is the therapy we need. Not another book offering get-rich-quick in real estate advice. Not another book proclaiming the imminence of the second coming of the Great Depression. This book charts the right path between housing mania and housing depression, offering wise advice for everyone thinking of make one of life's biggest and scariest decisions - buying that first new home."

—Ed Leamer, Director, UCLA Anderson Forecast

"The Smiths have written a "just in time" book which will greatly help demystify the disinformation that is rampant about housing and real estate. Their academic backgrounds plus the wisdom of their advice on ownership of property puts them in a unique position to be of great value to the American as well as foreign consumer. This is a "must have" book in my opinion."

—Frank Pecarich, Investor, Author, and Management Consultant

"Finally there is book that takes a rational and logical look at most people's biggest investment: their home. Houseonomics gives home-owners the tools to make decisions based on facts and not speculation."

—Charles S. Mizrahi, Managing Partner, CGM Partners,
Author, Getting Started in Value Investing

"The Smiths' meticulous research supports a completely different approach to building wealth through real estate. Houseonomics won't make people instant millionaires, but it will provide readers with the opportunity for a comfortable retirement. Houseonomics shows that treating a house first and foremost as a place to live is actually the soundest long-term investment. It's a dose of common sense and financial planning that is much needed in today's housing market."

—Matthew Haines, Founder, PropertyShark.com

"Homebuying can mean stressful encounters with The Industry: the lenders, agents, and lawyers who may not speak what you and I would call English. This book breaks down the Big Decision into small words and digestible concepts. The key is what the Smiths call the "Home Dividend"—an argument for homeowning and how it can serve your interests, not The Industry's."

—Scott Tong, Correspondent, Marketplace public radio

"In recent years, Americans have bought and sold homes like they buy and sell stocks: as speculative bets on future resale values. Houseonomics brilliantly reeducates readers on the real source of wealth creation from home ownership—namely, the steady savings of rent and taxes that build valuable home equity over time."

—Joe Matt, Analyst, Capital Research & Management Company

"Houseonomics helps everyone to systematically and simply understand what is needed to maximize potential profit in finding and owning a home and also have more fun while doing it."

—Bruce Gordon Hut, CFA, Founder,
Kegani Pacific Investment Management Limited

"This book couldn't be timelier. With hundreds of thousands of Americans expected to lose their homes because they took out mortgages beyond their ability to pay, it is clear that home buyers need assistance—beyond the reassurance of the mortgage broker trying to close the deal and get his commission. This book, written in an easily accessible manner, provides that assistance; it lays out the economics of buying, owning, and financing a home."

Joseph Stiglitz, Columbia University, 2001 Nobel Prize in Economics

"The purchase of a home is the most significant investment decision confronting nearly all adults. Yet sound advice, untainted by the self-interest of real estate and mortgage brokers, is extremely scarce. In Houseonomics, the Smiths provide simple and understandable answers to the vexing questions surrounding homeownership, making it a valuable resource for anyone serious about their financial future."

Bryan White, Managing Director, BlackRock

"Houseonomics offers great insights about how to think about homeownership. Its approach is innovative, but the analysis is grounded in common sense. A useful primer for what is the most important investment most people make in their lives."

Paul Efron, Retired Partner and Advisory Director, Goldman Sachs & Co.

"This book is a common sense response to those who question the value of homeownership. The Smiths validate the argument that homeownership is normally a key component of lifelong wealth building. They present a practical guide to basic financial analysis for those planning on owning a home or who currently own a home."

Doug Duncan, Chief Economist, Mortgage Bankers Association

"There is a lot of wisdom in Gary and Margaret Smith's Houseonomics regarding the biggest investment that most people ever make. It is so well written that reading it is a joy and yet almost everyone can gain valuable knowledge in the process. The time you take to read this book will be a smart investment indeed. Having taught economics at Stanford for 35 years, I can only wish that more authors were as knowledgeable as the Smiths and wrote this well."

John B. Shoven, Stanford University,
co-author with Secretary George P. Shultz,
Putting Our House in Order: A Guide to Social Security and Health Care Reform

"The "Home Dividend" is a powerful concept and, indeed, an engine for prosperity."

Ed Yardeni, President, Yardeni Research

Introduction

The American Dream is to own your own home, whether it is a log cabin in Oregon, a ...

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Customer Reviews

Well worth reading!
With all the press these days about declining home prices, the sub-prime mortgage mess, and the like, there's a lots of fear about buying or owning a home. Houseonomics dispels those irrational fears and walks you through why it's still a good idea to own your own home.

The basic premise of Houseonomics is that you should look at your home as a long-term investment, like an IRA. The big difference in the way that that this book views home ownership is that the main financial benefit of your home is not that it will be worth more in the future, when you sell it, but that it actually gives off a tax-free dividend - that would be the amount that you would have to pay in rent, if you didn't own. Simple, no?

It covers and analyzes the costs as well as the benefits, and really shows that you don't need your house to appreciate in value a lot - or even at all! - in order to gain financial benefits from it. In other words, owning a home is worthwhile ... but not in a "get rich quick!" kind of way. And don't focus on price appreciation.

Peppered with anecdotes, Houseonomics is quite easy to read, even though there are plenty of numbers in it. As a layperson, I had no trouble understanding the concepts laid out. It also covers home ownership issues and questions such as how much house you can afford, the home buying process, mortgages, refinancing, remodeling, and selling.

All in all, a satisfying and informative book, and a must-read for anyone who is undecided whether they should rent or own.

Very useful information!
The first three chapters set up their approach, using the novel idea of home dividends to explain why buying a home often makes sense even if home prices only go up a few percent a year over the next 30 years.

In later chapters, they discuss remodeling, vacation homes, and rental properties. Their approach is consistent and deceptively simple: think about the benefits relative to the costs. I say deceptively simple because it is the logical way to look at it, but most people don't think this way. Most people buy a vacation home because their neighbors have one or because they think land prices are going to skyrocket in the desert or in the mountains.

There is also an unusually rich discussion of mortgages: short-term versus long-term, fixed-rate versus adjustable-rate, home equity loans versus refinancing, and reverse annuity mortgages. Other books tend to be pretty superficial about mortgages: either overly simplisitic (here's how to apply for a mortgage) or dogmatic (you never want an adjustable rate mortgage or a reverse mortgage). The Smiths try to help readers decide which option is best for them. The theme that emerges over and over is don't make the total payments error by simply adding up dollars no matter when they are paid. The Smiths give an example of Wall Street Journal writer making this error and I can attest that this is not an isolated example. I've seen dozens of articles in well-respected newspapers and magazines that make the total payments error when discussing refinancing, biweekly mortgages, 15-year mortgages and early loan payoffs.

Bottom line: This is a VERY useful book.

A Clear Explanation of Why Home Ownership is a Good Investment
Historically, home prices have not increased as much as stock prices; yet most people have made more money from their homes than from the stock market. The Smiths explain this paradox. They also show why homes are likely to be a better investment than the stock market in the future, too.
This book is VERY different from most real estate books. I didn't feel like I was listening to a get-rich-quick scam by a con artist. This is calm, sensible advice for long-term homeowners.