Housing fades as an investment

NEW YORK, Aug. 23 (UPI) -- Banking on a home's rising value to fund retirement, a staple U.S. financial strategy for decades, may be a thing of the past, economists warn.

"People shouldn't look at a home as a way to make money, because it won't," said Dean Baker, co-director of the Center for Economic and Policy Research, The New York Times reported Monday.

Stan Humphries, chief economist at Zillow, an online real estate marketplace, said there was "no iron law that real estate must appreciate," an observation backed up by the burst bubble in the housing market that began in 2007.

Experts expect home prices may have dropped 20 percent in the past year, a figure awaiting confirmation with the monthly National Association of Realtors report expected Tuesday.

That stands in stark contrast to the 1990s, when home prices jumped about 4 percent a year, providing a considerable nest egg for homeowners in their retirement years.

Humphries predicted some housing markets will take more than 20 years for prices to recover to pre-recession levels.

Phoenix lawyer Robert Austin said the value of his home jumped from $200,000 to $500,000 before the recession hit. But the price has now returned to the same $200,000 he paid for it, the Times said.

"I thought when my daughter gets out of school, I can sell the house and buy a boat and sail around the world," he said.

Now, it "may be a while" before he can act on that plan, he said.