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Housing isn’t an investment if you don’t plan to sell. One doesn’t receive a yearly liquid return on a house like they do in an index fund. Most people aren’t b
by alexmingoia 7y ago
Housing isn’t an investment if you don’t plan to sell. One doesn’t receive a yearly liquid return on a house like they do in an index fund. Most people aren’t buying and selling a house every year. Lowering debt (refinancing) isn’t “earning” income.
- cjbillington 7y agoThe interpretation I've heard is that the dividend is the rent. You can rent it to someone else for a few percent of its value per annum (which definitely looks like an investment), but even if you don't, it's still paying the dividend in the form of you not having to pay rent each month, which would be the case if you didn't own the place.
- alexmingoia 7y agoThe rent is profit only after the loan is paid, minus property taxes, repairs, insurance, and management costs. If one isn’t living in the house then it’s not a home and they aren’t a homeowner, they’re in the property management business. My point is that obtaining a mortgage on a house is not necessarily an investment, particularly if one plans on living in it. Yet I often hear from homeowners that their home was a “good investment” despite never having realized a gain on it, and never planning on selling it.
- barry-cotter 7y agoIf you live in it it’s an asset. You’re receiving a return in the form of imputes rent, the money that you would have to pay to rent equivalent housing. That your return is in kind not cash doesn’t make it not an investment.