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People also are usually unable to make highly leveraged investments in index funds in the same way they are in houses.

• autokad 7y ago
  not sure why you are being down voted, its true. assume home prices go up 5% and the stock market goes up 7%. If I want to buy a house for 100k and put 20k as a down-payment and live in the spot for 5 years, I can make 8051$ off the stock market (invest 20k) but my home would have appreciated 27k$. sure there are some other factors, and maybe my numbers are not right, but I think it gets at what you were saying, an advantage of buying a home is you can make a leveraged investment.
  • leetcrew 7y ago
    in general, houses appreciate in value over time, but that doesn't mean your house will. leverage multiplies your exposure to the upside and the downside of an investment, and a single house is a much more volatile asset than SPY. imagine how much it would suck to be upside down on that $100k mortgage after five years.
    • Spooky23 7y ago
      You have to look at the cash flow side too. Your loss is offset on a comparison basis if you were paying rent. You also are limited to losing everything you put in, while leveraged investments can lose more.