The current economic meltdown has me pondering just what people are thinking--or IF they are thinking....I read that mortgage brokers were basing a lot of mortgage risk taking upon a standard they developed called HAR, "Housing Appreciation Rates"...it seems that they applied an annual appreciation rate on a home and calculated that the value of the home would increase every year by that amount, regardless if the current appraised value....

so let me understand, you build a 3000 sq ft home in a nice neighborhood, and you can count an unending increase in value? I know they based this on averages but, please, it has to top out somewhere....did they think that things in Texas, Tennessee, Missouri, etc., would skyrocket in price to equal the home proces in California? The California housing market was destined to burst. $750k or $1M for a 3br brick house is a joke.

Bottom line, you build a nice 3/4 br home in a nice neighborhood for $200k, it might at best be worth $230-250 in 15-20 years. It will top out. People are insane if they think they can buy ANY house and it will ALWAYS increase in value. I have a neighbor with a $130k home. That is it's top. It is maxed out, it'll never go for more, nor should it.

Methinks folks have put too much stock into homes as a means to creating wealth. We need to refocus on creative thinking, ingenuity and industriousness. If you wanna increase your wealth, I would look at some kind of business venture and use your home for living in and not much more.