The world seems to be spinning in a “Wizard of Oz” like tornado and, when we land, I don’t think we’re going to be in Kansas anymore. It’s a wierd world when your home is no longer an investment.
BofA CEO: Owners shouldn’t look at home as an asset
CHARLOTTE, N.C. — Homeowners may need to look elsewhere for long-term investment returns as housing prices in some areas may not rebound long-term, Bank of America Corp Chief Executive Officer Brian Moynihan said on Tuesday.
Moynihan, CEO of the largest U.S. bank, said at a state attorneys general summit that low population growth in some regions of the country indicated that prices might not rise in the wake of the worst financial crisis since the Great Depression.
“It’s sobering to think, but some people shouldn’t be thinking of (their home) as an asset,” Moynihan said at the 2011 National Association of Attorneys General conference. “They should be thinking of it as a great place to live.”
Moynihan said the long-term average annual rise in post-war U.S. home prices of 4 percent owed much to the explosion in domestic population and, in more recent times, the relaxation of credit standards across the mortgage industry.
“The reality is that the population is not expected to grow the way it did post World War I and World War II,” he said.
Moynihan noted an Ohio customers’ complaint that his 100-year-old home was valued at $50,000. The home, Moynihan said, would be valued as “some multiples of that figure” if it were located elsewhere, but stagnant population levels in the state are driving demand and home prices lower.
The conference included many of the state attorneys general currently engaged in negotiations with BofA and other lenders about a broad settlement to allegations that the industry cut corners on foreclosures.
Moynihan said during his prepared remarks that he had spoken with the attorneys general about industry issues, but declined to comment further about the discussions.