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Depends on your definition of investment and what you're looking to get out of it. If they maintain value by appreciating at least at the rate of inflation, th

Depends on your definition of investment and what you're looking to get out of it. If they maintain value by appreciating at least at the rate of inflation, then they're a great store of value. At that point, you need to take all expenses into consideration (including any applicable tax deductions and rental incomes from rooms) in order to determine whether you're net positive or net negative versus renting. This can't be generalized since it depends on your local housing/rental market, however I can speak for my own situation where I pay about the same for my home as I would for a rental where I'd live by myself. If I was to rent out my extra room, I'd be paying significantly less. That's a bit long winded, just don't want people automatically rule out home ownership since not only can it be a point of pride, it actually can be financially beneficial if you're willing to do the math for your own situation.

pfranz 10y ago
In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit.[1] I don't think people are saying you'll never come out ahead (like one might say about someone who wants to take up daytrading). Most of the arguments I hear are, "houses are a terrible investment" or "don't think about it as an investment" and they're not trying to dissuade people from buying houses--just from buying them as an investment. Calling it an investment encourages people to buy when they should rent, or buy larger houses than they should. Houses being the largest purchase most people make and the one thing containing most of one's wealth (and the fact people only do it a few times in their life) should mean people need to be very careful about the decision. People also tend to undervalue the subjective attachment to the houses they live in, causing them to make poor financial decisions. Like others have said, houses generally perform slightly less than inflation, there are additional costs like maintenance, taxes, and insurance people generally don't always consider. Houses are illiquid, you can move to a place with smaller rent, but you can't divest yourself of half your house (you could take a second mortgage, thought). It's also much easier to relocate when renting even if you're paying the same rent. When fixing up your house it's easy to not think about cost/benefit or blindly think your upgrades will pay for themselves. [1] http://www.investopedia.com/terms/i/investment.asp http://www.investopedia.com/terms/i/investment.asp
- nommm-nommm 10y ago
  Perfect comment, you explained my feelings and points better than I could. Like I said, I am a homeowner. I love being a homeowner. But I just can't stand the myths around homeownership that people tell me. I didn't buy a house in order to get rich, I bought a house for consumption, to live in. I hope I come out ahead when I sell my home. I'll be happy as pie if I break even. My dad asked me why I was buying a house if I thought it was a poor investment. "To live in." He was honestly confused as to why someone would buy their primary residence other than "because it's an investment." Nobody believes a car is a good investment but we all still buy them, to use them. >When fixing up your house it's easy to not think about cost/benefit or blindly think your upgrades will pay for themselves. This is a great point that should not be overlooked. I think HGTV is terrible in this regards. One of my coworkers told me you should always get every single upgrade you want because you will always get that money back when you sell. This is just so untrue I find it difficult to believe that anyone would actually believe that.

pfranz 10y ago

In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit.[1] I don't think people are saying you'll never come out ahead (like one might say about someone who wants to take up daytrading). Most of the arguments I hear are, "houses are a terrible investment" or "don't think about it as an investment" and they're not trying to dissuade people from buying houses--just from buying them as an investment. Calling it an investment encourages people to buy when they should rent, or buy larger houses than they should. Houses being the largest purchase most people make and the one thing containing most of one's wealth (and the fact people only do it a few times in their life) should mean people need to be very careful about the decision. People also tend to undervalue the subjective attachment to the houses they live in, causing them to make poor financial decisions. Like others have said, houses generally perform slightly less than inflation, there are additional costs like maintenance, taxes, and insurance people generally don't always consider. Houses are illiquid, you can move to a place with smaller rent, but you can't divest yourself of half your house (you could take a second mortgage, thought). It's also much easier to relocate when renting even if you're paying the same rent. When fixing up your house it's easy to not think about cost/benefit or blindly think your upgrades will pay for themselves. [1] http://www.investopedia.com/terms/i/investment.asp http://www.investopedia.com/terms/i/investment.asp

nommm-nommm 10y ago
Perfect comment, you explained my feelings and points better than I could. Like I said, I am a homeowner. I love being a homeowner. But I just can't stand the myths around homeownership that people tell me. I didn't buy a house in order to get rich, I bought a house for consumption, to live in. I hope I come out ahead when I sell my home. I'll be happy as pie if I break even. My dad asked me why I was buying a house if I thought it was a poor investment. "To live in." He was honestly confused as to why someone would buy their primary residence other than "because it's an investment." Nobody believes a car is a good investment but we all still buy them, to use them. >When fixing up your house it's easy to not think about cost/benefit or blindly think your upgrades will pay for themselves. This is a great point that should not be overlooked. I think HGTV is terrible in this regards. One of my coworkers told me you should always get every single upgrade you want because you will always get that money back when you sell. This is just so untrue I find it difficult to believe that anyone would actually believe that.