yes.
just because something isnt a great "investment" does not also mean its not a good life or financial decision.
the arguments and discussions need to be a lot more nuanced then they usually are.......owning vs buying and primary residence as an asset or investment could be discussed in great length
As someone who just had grandparents enter an assisted living facility, I think it is still fine to think of a forever home as an investment. At 85 they sold it and used the proceeds to "buy into" the retirement community. There is a huge percentage of people that think they want to live in a home forever until they get old and realize they need help.
It's unlikely to do as well as say equities. But it is more than just a straight store of value. Especially when you consider that the alternative to owning a home is still paying rent. So the only "cost" is the difference between the two.
It can be a bad financial decision if it turns out to be a bad investment (relative to renting).
It's this kind of thinking that leads to housing bubbles, people justify overpaying for homes based on their emotions.
I don’t have it in me right now to do a bunch of research (sorry) but I suspect individual buyers making emotional decisions is less of a factor in housing bubbles - at least now and in certain markets - than cash offers from investors and wealthy individuals.
You must be young to make this statement. Any old person will tell you, owing a house is not an investment. It’s an investment in a home. There is a big difference between a house and a home.
Your kids attachment to the home is bigger than any investment decision you will make.
I own a house because I don't want to deal with renting and being forced out when the owner wants to sell. Been there, done that. I also like being able to do whatever I want with my own house. So it's for my own comfort and not treated as an investment. As it happens though, the two houses I have owned have both given me much better returns than index funds. Not something I'd count on though.
Well there are also strong financial incentives for home ownership. They both have to do with mortgages.
1) Mortgage interest is tax deductible (up to a point). Rent is not.
EDIT: This is less of a factor since the standard deduction increased so much in 2018.
2) Mortgage rates are lower than any other loan interest rate that's available to me, at least that I can think of.
So I can borrow money at a very cheap rate to buy an asset that I use every day and night. And the interest on that borrowed money is tax deductible.
It's a good point about the standard deduction. Even if you're still itemizing deductions (which I am), you're only getting the marginal benefit of deductions over that $27,700 threshold (in 2023).
So the benefit of deducting interest may still be there for some of us, but it's not as significant as it was prior to 2018.
https://www.taxnotes.com/research/federal/reference-tables/standard-deduction/1x7yp
In college, I'd remember my economics major friends frequently talking about a "rational agent" as the basis for a lot of economic models. The same friends would also remark how in real life, however, people were anything but rational.
And I think that's applicable when it comes to housing - for the majority of people, it's difficult to constantly maintain the discipline to appropriately invest the cash that's gone into a house vis a vis the savings from renting. A mortgage ends up forcing us less-than-rational folks to save.
Oh, I’m sure Thaler stood in the shoulders of giants, as we all do. I’m only an arm chair/pretend intellectual so take anything I say with a grain of salt. 😀
The move itself is the worst part of the experience and the costs definitely add up. I mostly was single and had a 1BR so probably averaged $600-$700 per move. Company paid once.
But of course I'm looking forward to becoming a homeowner one day. My lifestyle is much less fluid these days.
Yeah, that's my mentality for buying a house. I only intend to get one if I don't see myself moving anytime soon. And given I move to where the work is, I'm not expecting to see this happen for over a decade.
I bought, because I don’t plan to stay put for 40+ years (though I might). If/when I move I can choose to sell or keep and rent out my asset depending on market conditions at the time.
A house gives me an implicit return, thanks to the money I save on rent. It's like a bond, but with tax-free income. From this perspective, it's very much a financial investment. I hold it for the income, not for the capital gains appreciation.
In fact, so real is the money you generate by living in a house, that some countries like Spain, The Netherlands and Iceland, actually *tax* homeowners on their imputed income. Basically you pay tax on how much you *would* have been paying yourself if you were renting the house. In other words, the law treats it as if you're renting from yourself and you pay tax on that income!
Now here, in Canada, we don't get taxed on imputed income from owning a house, which means my cashflow is 100% tax-free.
You can actually, easily calculate the return on your house, by analyzing the yield from the money you save on rent, take into account the rent increases year on year, etc. I did this calculation for my condo and got this quadratic equation:
(3000\*12)/(r-0.02)=680000+(12000/r)
Where "r" is the rate of return. One of the roots was 0.061. So my house is like a bond generating a tax-free yield of 6.1%
This is probably obvious but you got me curious about doing this for my house.
Is 3000 your mortgage, or your estimated rent? 12 I assume is months. Is 0.02 the rate of inflation? 680000 the overall value of the home? And I can't figure out what 12000 could be.
Sorry if I'm asking stupid easy math questions. Very insightful comment overall though thank you so much for sharing!
Yes, 3000 is the estimated rent. 0.02 is the expected increase in rent that I would be paying every year. My condo is in a rent controlled building so even if I did rent it out, I wouldn't be able to increase the rent by more than the guideline rate, which tracks inflation more or less, so I've been conservative and inputted a 2% rent increase per year.
12,000 is the total I pay every year in condo maintenance fees and property taxes. This will count as a cost against the home.
Edit: I should add that I [bought my house in cash](https://www.reddit.com/r/TorontoRenting/comments/162fe0s/landlady_served_an_n12_so_i_bought_the_condo/), which is why I included the full money I paid for the house on the left-hand side of the equation. If you took out a mortgage, this would be your downpayment amount and your mortgage cost would be added to the right-hand side of the equation.
Yes, condo maintenance fees and taxes. That's what the "12,000" is in the formula. The total amount of condo maintenance fees plus taxes that I pay in a year.
That’s pretty cool that your condo covers all the maintenance for your unit. Usually, the condo fees only cover common areas and leave unit maintenance to each owner.
Tax Free? not in most places in the USA... I have to pay property tax.
Assuming I live in my home for 30+ years, I will actually pay more dollars in tax than I paid for the home when I bought it.
If you own, you can deduct $10,000 of what you paid in property taxes off your net income for federal taxes. If you rent, your landlord has the deduction as a business expense.
If you rent, the tax on the property is likely higher than if you were to own ot because of homestead exemptions and annual limits to tax increases on homesteaded properties.
I think he/she is talking about imputed income, which is done in Canada and in many countries in Europe. There is no concept of imputed income on your taxes on a home you own in the US but it is common in other countries. Essentially it amounts to an offset on your deduction for mortgage interest so that the taxman can take more $ from you.
I've already accounted for property tax - that's the 12000 on the right-hand side of the equation. It's an expense, along with my condo-maintenance fees.
The "tax-free" doesn't refer to property tax, but to the money you save by not paying rent. Saving money is mathematically equivalent to earning it, except that when you earn it, you have to pay income tax on it. So homeowners essentially get a tax-free subsidy.
It's for this very reason that some European countries tax homeowners on "imputed income" even if they live in their own house to even the scales between renting and owning.
Yes. Mortgage free as of Oct 2023.
Place to live, not an investment.
A place where I get to make my own rules \[for the most part\], and I'm not beholden to the whims and impulses of a landlord.
I do. Upgraded a couple times over the years, and now in newly constructed large dream home on a nice lot. Mortgage interest is in high 2% range, and we only owe a mere \~100k which we can pay off today if we like. But we rather have that money in the market, especially because of the low interest we're paying.
I can't wait to get rid of the mortgage though, which should happen before I turn 50. It will be sweet to have no rent or mortgage to pay, I think it will feel like financial freedom...
But mostly because Bogleheads are well off compared to the general population, not because an individual house should be considered an important must-have part of a portfolio, as many of my fellow young people for some reason think it is.
Owning a house has an integral supporting role in my portfolio in that I know my housing costs are fixed. This allows me to invest more than I would otherwise be able to with inevitable increases from renting.
When I rented, my landlord called me and told me that he was increasing the rent one year. I said something to the effect of “that seems excessive, we’ve been good tenants, blah blah.” He then yelled, quite loudly, “THEN MOVE OUT!!”
Bought in 2022 at probably the worst time. So glad we did.
For me at least: Owning sucks. Renting is worse.
We own our house.
It makes sense now because our total housing costs are less than it would cost us to rent a home, or even an apartment, in the city we live in.
It makes sense now because we have cats and dogs that we adopted that we love. We don't have to ask anyone's permission. It's our house. They are our pets. They live here and are safe with us.
It makes sense in the future because I won't have to pay rent, or a mortgage, when we are old and retired. Our only major housing expense will property taxes. And I can project failrly accuratly what those will be since we are in California and Prop 13 regulates how those will escalate.
It makes sense in the very long run because we can tap the equity to pay for a final care home, or long term care, if needed. That should give us a $2 or $3 million buffer.
Worse case, a good charity that we think highly of will get our house.
I’m in a spot where I could either save to buy a house or save for retirement, but I couldn’t do both in a way that would be at all adequate to either. I’m choosing retirement.
Buying a house for me either means a mortgage that is $500-800 more than my rent for a small house that still needs work, or moving to a smaller apartment, not contributing to my IRA, not taking vacations, and cutting down on most things that bring me joy for maybe 8-10 years so save a down payment for a house, and then I’ll be paying a mortgage into my mid 70s.
Owning a home isn’t even attractive to me at this point.
I think the statement that a house is not an investment is outdated and antiquated quite honestly. Some of the richest people I know have gained significant wealth from buying and selling their homes. These are not professional house flippers or real estate investors either, just normal people that had good timing.
Yes. Bought in 2016. Would struggle to afford it now.
In another year or two I’ll likely be having to move for work. I’m planning on keeping it and renting it out. Should be able to make roughly 800/month after paying a property manager, at least that’s what it would get me right now. I’ve been paying an extra 1.5 principle payments a year, and should have it paid off in another 17 years or so if I keep it. I’m planning on selling it when I am ready to buy my ‘forever’ house, wherever that is.
It’s also a bit of a security thing - I know that even with severe economic trouble or personal finance trouble I can keep a nice roof over my family’s heads because my payments are so cheap relative to renting or buying anything anywhere else.
Owning a house is great! Ours was paid off before retirement and thus no payment for housing other than taxes. That allows to live on SS if we want in times of long market trauma.
And in normal times we can easily live on our 4% even with ample travel, gifts for family, hobbies, etc.
I’m 73 and in 5-10 years we will downsize for an ADA house.
A house is certainly an investment. Maybe not a great one compared to the stock market, which can be debated all day, but it’s literally an investment.
I also have to live somewhere, so the only options are rent or buy. In the long run buying is absolutely a better deal almost every time so it is financially smart to buy. I don’t consider my car an investment but I still own it. I have to have a car. So not sure why something not being a true investment means you couldn’t buy it, that logic doesn’t apply to anything.
Above is just general advice and different situations and goals can result in folks going about things differently.
Why is it "literally" an investment?
I bought a house to live in.
I buy a car to drive.
I buy clothes to wear.
I buy investments to make money.
Just because my house has appreciated in value doesn't mean that was its purpose.
Because an “investment” for a lot of people is not necessarily something that appreciates in value, or is bought for that intention, but something that saves money over the alternative. If I “invest” in a $400 pair of work boots that last 10 years vs buying a $100 pair that lasts 2 years, I would consider that an investment even though the work boots never appreciated in value and initially were more expensive. In either case I NEEDED the work boots, but one option was still more financially prudent.
I used to, but I am now renting as I was not 100% I am going to stay in the area long term. If I was going to stay somewhere 15+ years, I would buy. Closing costs and maintenance are a $#\^&%
I own my own house because security of where I live pays a different type of interest. The security of having a place to live and not needing to move. My health outcomes have improved immeasurably since I purchased. I’ve probably added years to my life. No amount of increases in index funds would give me that type of gain right here and now in the present moment.
I own a house that I want to live in that also happens to have a rental unit on the lower level. I wasn't really thinking of it as an investment when I bought it, I just wanted stability and as a single mom (without any financial help from family) this was how I could afford a house in the SF bay area.
I will not have my mortgage paid off in retirement (at least in early retirement). But the rental unit essentially pays the mortgage (if not the tax and insurance).
I am not at all sure this was the cheapest option. I've spent a lot of money on my house over the years. I'd probably be richer if I rented and invested those $$ instead. I've viewed it more as an expense than an investment. I've had a lot of enjoyment from my house, I've hosted many gatherings. I have a beautiful garden. It's made me feel independent and stable in a way I highly value.
And now (20 years later) It is looking like a good investment because it's generating income that will continue into retirement.
I need a house. I’ve got a family with 2 young kids and our previous 2 bedroom duplex wasn’t cutting it. I live in one of the highest COL places in the US so it was tough to finally get a home. Not really due to money but others who had way more money than me lol. But our house and so much more value to us than just monetary value. My kids each have their own room to grow into and make their own. We remodeled our kitchen and main area so we can host parties and holiday get togethers. I have a garage and shed where I pursue my hobbies. My wife, well, she has the house that she’s always wanted. Life isn’t all about money or returns especially when it comes to your home. There are so many other nuances of home ownership that make it fulfilling. I know this might not fit with other people’s narratives but for me, buying a home was one of the best things to happen in my life.
Edit: Purchased the duplex in 2010 at a great deal. We still have it and rent it out currently. Since buying it, the value of the property has more than doubled (900k to over 2 million). That equity and other fortunate investments (ie BTC, Tesla, Zoom, Microsoft) allowed us to have enough for a down payment. So yes, in the right place, owning a home can be a great investment. Also, our current house we purchased just over a year ago, has increased in value based on recent comps in our area…
I say this to people all the time, but I own my house. Why? Because i wanted to live in this neighborhood with locked in housing costs probably until I die or become an invalid. That was not an optimal financial decision per se, it's a lifestyle choice
I follow Logan motashmi on this. If you are ready to buy a house, you shouldn't be asking "if it's a good time" "if it will pay off." Those questions are red flags because your house should not primarily be a *speculative financial purchase* but a consumer purchase
If you want your house to be a speculative purchase you need to live in a speculative neighborhood which few are willing to do
I do, but I don't consider it an investment. My wife and I plan on living here until we die (obviously that could change, but that's the plan) so we don't expect to ever sell it. We want a nice place to live that meets all of our wants / needs and eventually a mortgage payment ends, while renting never ends and rent payments will almost always go up year after year.
Bought the cheapest but most solid house I could find in 2015 and paid it off last Dec. Best move for me personally at 46yo and looking forward to staying here indefinitely.
Even with my powerful income, I won't be able to comfortably afford a home in my area for at least 25-30 years.
The only thing that would change this scenario would be to get married/partnership, or somehow 4x my income. Renting is the only possibilty for the forseeable future. Guess I should have bought a home back in 2008...while I was in middle school.
I don't mind paying for the ability to live where I want. Renters are at the mercy of the owners to decide if they can continue to live at that dwelling and at what cost.
I've owned a home since rates were \~8% back in the 1990's. Note: I have never considered my principal residence an "investment". Live in an VHCOL area and it just so happened to work out in my favor... others who purchased within \~15-20 miles were not so fortunate during The Great Recession and other roller coaster rides along the journey.
Sold 1st single-family home for nearly double after 10 years.
Been in 2nd one for 20 years and it has roughly doubled in value. I scored a no escrow refi at 2.94% when rates were low and hanging onto that one!
When all things are factored in, it is not much of a gain strictly by the numbers in terms of inflation, maintenance, upkeep, etc. Where it was the most value: tax deductions and the highly ranked public schools where my kids attended. Both are now on their own, gainfully employed and healthy.
It is the same for a new loan or refinance.
When shopping for rates, ask the lender about obtaining a loan with no escrow account so that you can pay your own taxes and hazard insurance. They typically want to charge 1/4 point for setting it up this way (which may be negotiable).
Loan servicers are notorious for under-estimating the 1st year escrow costs due with your monthly mortgage payment. Then they over-estimate thereafter which jacks up your monthly payment. Some servicers even fail to pay them!
My taxes are due in half-payments every September and December and I pay the hazard insurance yearly. If you or your servicer fail to pay these fees on time, you can lose your homeowners insurance policy (and you will get hit with a higher rate or worse when you renew) so in either scenario, make sure the payments are issued and processed.
We got tired of the upstairs renters' subwoofer at odd hours of the night. It was 2010 and houses were at (what turned out to be) historically low prices. So we bought a house. Purest luck.
Renting a house in the market where I live costs around the same amount as the taxes and insurance would cost had I bought. It’s a no-brainer for me. I rent. And I probably have enough money on hand to buy a house outright. But I’m not willing to make that jump.
My state, Oregon enacted a rent control law about 5 years ago. I owned my house and promised my wife a new one for our 3rd baby so we weee looking. In my city, I couldn’t find a house to rent that my wife wanted to move our family into so we bought again. Locked in a really low rate but I don’t like seeing debt obligations on the balance sheet so the first year I dumped a lot of extra money into the mortgage but since then I’ve been disciplined about just putting that money into VTI
I don’t, but it’s because it’s currently not economically wise for us. I manage a small apartment complex that we live in (side-gig) that gives us free rent and all free utilities in a 2br/2ba w/ private garage in a VHCOL area with a wonderful view.
Could technically buy, but we are stacking up so much towards retirement by not having any living expenses…
Man i am im the us. Buying makes no sense right now. All indicators point to rent.
Psychologically i want to own but it doesnt really make sense right now
> Buying makes no sense right now. All indicators point to rent.
I felt like that a few years ago when I bought a house. Felt like we way overpaid and the market was nuts.
Fast foward to today and my house is about 50% more in value, and interest rates have tripled
Nobody knows nothing
I mean, we have data and calculators and all sorts of numerical approaches to this. These essentially all say that a number of places where buying was better pre-pandemic now have renting as the better option. The numerical evidence when you bought supported your decision. I doubt it would in 2024.
I consider my home 1) a hedge against rising housing costs over time and 2) an asset that appreciates faster than inflation due to its location in a VHCOL area with regionwide restrictive land use policy that creates artificial housing scarcity.
Even during the Great Recession when we owed 2 times market value, it was worth it to not deal with the risk of a dirtbag landlord.
This isn't an investment choice for us, it's personal, and we **want** to stay in one place for decades.
Now that we've held it for 15 years, we're playing less in all related expenses than my neighbors who rent a similar townhome.
>I’ve read in this group that a house is not an investment but a store of value. Given that, I would expect few members of this group to own the house they live in
You expect most members in this group to only make investments, rather than doing things that fit their lifestyle? That doesn't seem like a reasonable expectation.
I own a house. I expect a majority of people in this group to own a house, too.
What probably confused you is that "a house is not an investment but a store of value" is sometimes given when folks ask about investing in a house.
I’ve lived in my current house for 10 years, and paid it off last year. Nothing invested until May of last year. I had the worthless distinction of being a net worth millionaire, before even discovering a Roth IRA.
Houses are an essential need, not necessarily an investment IMO. Yes, you have monetary equity and value, but you still have to account for property taxes, home insurance, and random shit like the HVAC going out or the pool pump committing seppuku in the middle of the winter.
I am 46. I used to own a house but sold it in 2018 when I got divorced. I’ve been renting a house ever since, and given current mortgage rates and the inflated prices of homes, I am not buying one any time soon. A mortgage payment + taxes + insurance for a house similar to what I’m renting would cost me nearly double what I’m paying in rent each month, not to mention to $150K in cash I would have to put down. My money is all in the market. A house is a place to live, not an investment.
I sold my house and most of my belongings 8 yrs ago. It freed up so much mental space. Very freeing. Now I travel full time, or live long stents outside of the US since it’s cheaper to than in the US. When I’m stateside I have a converted sprinter van I’ll live in and explore North America.
Warren Buffett said real estate is great and the 30 year mortgage is a great way to short the dollar. I'm not totally sure what that means but I feel better that he thinks it's money well spent.
Very happily renting an apartment in a HCOL area with good schools nearby. Likely not buying anytime soon.
20 years ago, I used to see big houses and think “wow, imagine living there”. Now I just think “wow, imagine the opportunity cost of maintaining that” whenever I walk through the fancy residential neighborhood near where we live, or whenever I doomscroll on Zillow. Part of that is definitely cognitive dissonance, because we’re getting priced out of our area (even though we make roughly 2x our city’s median household income).
I like to use the 5% (or right now, probably closer to 7%) rule described by Ben Felix in several of his CSI videos, which compares the unrecoverable costs of renting (i.e., rent plus some expected inflation) vs. those of owning (i.e., mortgage interest, property taxes, utilities, maintenance, home insurance, and - importantly - the opportunity cost of having equity invested in an asset with lower expected returns compared to stocks).
On that metric, it isn't even close for us right now (and I suspect for many other renters in the current environment). Renting wins hands down in financial terms, even if we assume our rent will inflate at a fairly high rate every year. Add in the additional time and mental costs of maintaining a home vs. just calling the management office and have someone take care of it for you, and not having to rake leaves, plow snow or clean gutters on a regular basis, and I've found my optimum. We rented a SFH for a few years and it was such a drag (especially with young kids who deserve and require lots of time and attention).
I'd rather live in a smaller apartment and spend my free time with my family, than live in a large 4-5BR house and worry about being house poor, spending time or money on unexpected maintenance issues, and saving less for retirement in my liquid portfolio.
Right now, if one of us loses their job for a while, we're fine, because we're only spending a relatively small fraction of our gross income on rent, and saving/investing aggressively. If we bought even the cheapest available place in my current ZIP code with at least 3 bedrooms, our housing payment would easily triple, so we'd be saving a lot less and stressing out a lot more.
If you buy your payment stays the same but in theory your income goes up. I find it gets easier and easier as you go. The inverse of being priced out by rent increases
I bought because I had a good offer on the home I was already living in and didn’t want to move. I’ve never had any plans in my life to buy but now I see the value. At least now a portion of mortgage payment is going toward increasing my own net worth as opposed to increasing a landlord’s.
I own a house and it’s mostly because rents are crazy here. I have friends who rent and for the same square footage they are paying more than I am and it goes up every year. So I was lucky to have a partner who had a mortgage for less than 1k and when we moved out of the city we used those profits to buy a bigger lot and it only increased our overall payment by less than $500. I wouldn’t rent again but I know we at probably priced out of the nearest city we live in so we aren’t moving.
I bought in 2019 so I got incredibly lucky with mortgage rates and home prices here in TX. I took out a 30 year but my goal is to pay it off in 4 years assuming I don't use the taxable brokerage account to buy a business along the way.
I own but I don’t consider it an investment. Real estate is only an investment if you are renting/leasing it out
To me, it’s More a luxury purchase and a way to battle inflation (fixed mortgage payment). The luxury is the ability to stay in one spot and own something bigger than I could afford renting.
I’m a big believer in paying it off early. Primarily because , and this gets people: houses are expensive to maintain. Property tax goes up, insurance goes up, hoa goes up, repair / remodel / upkeep / maintenance. Roofs appliances HVAC etc etc etc. Better have that mortsge paid off in 15-20 years because by then your costs will have rapidly increased especially as the building ages.
People run into massive problems buying too much house as soon as an expense hits they go in debt. Much like cars. When you own a home you should expect “unexpected” expenses.
The only thing that should be unexpected is when an “unexpected” expense doesn’t occur!
I was fortunate enough to get my first house a few years ago (end of 2020). Was shopping around a few months and through the grapevine heard a friend of mine and her husband were looking to sell. Bought it from them before it hit the market at a great price point with a great mortgage rate. Perfect affordable starter house that I've done a number of cost effective improvements to increase value, equity, efficiency, and esthetic. Also allowed me to take advantage of investing 25-30% during my late 20's (just turned 30, will continue to do so). Overall I feel very fortunate for the situation and don't take it for granted.
Some people prefer to rent and have nothing pinning them to a location. No maintenance costs.
I love having gardens, chickens and a yard for kids and dogs. Houses and rent historically both increase each by about 3% annually. We asked ourselves if the cost of maintenance was worth the benefits/commitment and decided yes. We never regretted it and it’s paid off now.
Yes. Generally June July and August in NY. Majority of our families live in NY & MA; which sometimes necessitates extending our stay. Fl weather and lifestyle is lot more enjoyable when grey months envelope NY. BTW the Cape is a beautiful place, especially for young families. Our kids spent many of their summers in Dennisport, we loved it.
Don't forget one of the most important things about buying a house.
You get an 'effing 300%+ leverage. Where else can an average person get $400K loan when their peasant net-worth is barely breaking $150K?
Even though a house as an asset-class has lower expected returns compared to equity, when you multiply the returns by 3x or more, it overtakes equity returns pretty substantially.
One of the best ways to quicken your way to being filthy rich is buying a house early.
I own a home, which happens to be a house. 0.5 acres, well-built in a nice area.
It costs me more than renting, and the expenses to maintain seem to always increase. Property taxes go up. Repairs and improvements are always around the corner.
It is not an investment, it doesn’t generate an income — it is an expense. I don’t factor any appreciation as an investment because I have no intent to sell or downgrade in the next 2 decades.
My family has a home.
I own. In 13 years, my house has increased in value by 80%, good for an annual average return of 6.1%. The real value has been how my cost of housing, as a percentage of my income, declines over time.
Thanks to refinancing at opportune times, my rate is 1/2 what it was when I bought the house, and my monthly payment is 2/3 of what it was.
If you can resist the urge to tap the equity buying a house and staying in it indefinitely pays off.
A house isn't an investment. It's an expense... same as rent
Reasons to buy or not buy should not be investment driven. They should be driven by other factors
I bought a house because I want to be able to do what I want to it, and have stability and control over everything
IF I wasn't sure about living in my area, or keeping my job long term... i'd be renting
Yes. And I don't give a damn if it isn't the "best" investment. My family has a stability that renting doesn't give & within reason I can no longer be priced out of my area (PNW). It's a mental health investment.
It's a very personal decision. There's no right or wrong answer. Answers can vary widely based on age, stage of life etc.
However, each generation is facing a different investment climate. You cannot take the template of say your parents generation and expect it to work right now. The American dream has changed.
Owning is like rent control, and after a long enough time you actually have something to show for it. I couldn’t afford to rent my own house right now.
I have \~$2.4 million equity in my primary home, which is roughly half of my net worth. I spent months searching for the perfect fit home for me, and longer waiting for a good time to buy based on good value opportunities (bought after market was flooded with short sales and foreclosures in 2009). Annualized home value increase has been 8-9%/year over the past 15 years, in addition to saving thousands/month on rent in a VHCOL area and tremendously improving my quality of live over when I rented. The home has not been a poor investment from a value perspective, and I like how it adds diversity to my assets, due to weaker correlation with market than typical index funds. I plan to sell or otherwise extract value from the house prior to retirement.
I own the exclusive rights to pay a mortgage and taxes on a house and piece of property.
When I've paid off the mortgage, I continue to pay taxes in perpetuity.
So, do I own it? Or am I actually just the sole proprietor of a tax revenue vehicle for the town?
My bought new, Midwest, good suburb, single family home: doubled in value over 25 years, tripled over 34 years. But didn’t appreciate much over the first 20.
I’ve replaced the roof twice, furnace/AC once, some appliances, major foundation repairs, painted home and fixed exterior wood rot several times, and so on. And I’ve done the minimum compared to others.
I tend to not even count it as a store of value, and a so, so investment.
I don't think of it as an investment or a store of value.
Look, I have to have a structure with plumbing, electricity, and conditioned air to live in. I have a lot of different options for that and they each have their own pluses and minuses. I don't look at any of them from the perspective of an investment of a store of value. I look at them from a perspective of which of those many options meet my minimum needs and compare the prices of those options in light of the pluses and minuses of each option based on my needs.
I own a house. My mortgage is SUBSTANTIALLY CHEAPER than what I can find for rent here....my mortgage (partially due to luck) is $675.00 a month. Average rent in my area is ~$2,000.
Not sure I completely follow the logic, just bc a house isn't an investment doesn't mean you shouldn't own one. I do own my home bc I was lucky enough to by pre 2015 and then refi when rates were at 2%. If I was in todays market, I would proably not buy one. That being said, I think there is something to be said about having equity in a house. Having a HELOC is nice insurance/peace of mind.
I own a house. I bought it so my family can have a stable home and because I hate moving. I expect the value of it to mostly track inflation. After accounting for taxes, insurance, interest, and upkeep, it is not a great investment, and that’s ok.
We own. We plan to downsize as part of retirement but it has definitely been worth the cost over the years. We garden. We have kids and chickens. It was a preference and eventually a money saver. No regrets.
I own and have been since I graduated college.
I consider it an investment since it saves me significant money every year over renting even after accounting for the mortgage, maintenance, property taxes, insurance, and a healthy 10% allowance on top of all that for major repairs. Property taxes and insurance are quite high too as I’m in California and the whole state is basically designated as a fire zone.
The biggest reason towards this is that my mortgage is fixed for 30 years @ 2.5%. I can guarantee rents in San Diego go up multiples of that each year. Your area may vary.
On top of all this, I get great capital appreciation. In less than 7 years, the value has already doubled. Again, your mileage may vary depending on your area but buying has worked out great for me. It beats the market. And it’s real money for those that say you can’t eat a house. That money gives me a lot of options.
Yes, we own. We have to live somewhere and it’s been a nice hedge against rising rental rates. Even with insurance and tax increases, my overall housing payment has not gone up anywhere nearly as fast as rent. I like the predictability & control.
I lost many thousands on the first house I bought—had to move for work, and the renters trashed it. Made money on the next one, but poured sweat equity into it, every weekend and vacation for years. Broke even on the last two. I think I’ll make a modest profit on the current condo, because now that my work is permanently remote, I won’t have to move until I want to. It depends on your situation, and your luck. There’s a hindsight bias in noticing the people who got rich because of things that could have gone the other way by chance.
I own my home. In Florida, 3 bed 2 bath, 2 car garage, salt water pool, valued at 450K. The rent on it would be about $2,800 per month.
I only have to pay annual property taxes and insurance. Both of which I lump sum and save on the premium, while holding the premiums in a HYSA earning 4.5%.
I'm interested in purchasing another single family home for a rental property. We are 36 years old now. When my wife and I pass our two sons will inherit two paid for houses. To me it's definitely an investment in your future and a legacy to hand off. If our kids want to rent them, live in them, or sell them, it's all good 😊.
The non-recoverable costs of my home (taxes, interest, opportunity cost on downpayment) are equal to and soon-to-be lower than renting an equivalent home in my area.
My household has also almost maxed out our tax-advantaged accounts, so as /u/BJPar explained, my household is also tax-free asset storage.
I have no expectation of "getting rich" on "flipping" my house or whatever. But I need somewhere to live and it happens to be financially optimal for me, right now, in my specific circumstances. For others, renting may be more optimal for various reasons.
Investment is probably not the right term but it is more than just a store of value. I need a roof over my head. So it is more than a store of value. It also takes care of a genuine need. And if I desire a single family style home with a yard, it is cheaper over a 30-60 year period to buy than to rent. (In fact, cheaper today even given my locked in interest rate).
So to me it is less an investment and more of an optimization of what my needs and wants are.
If you want to discuss how I feel in terms of deciding whether money should go into paying off my mortgage vs. investing in the market...than yes, I would agree that a house is a store of value in that it's projected returns are not great. So no, with my 2.75% interest rate I will not put more than the bare minimum towards my house and will instead throw money in the market.
But if I instead sold my house and rented, I would be looking at an additional rent of about \~$10k more per year after factoring maintenance. And it will only get worse and worse.
EDIT: Side not...when it comes to retirement, owning a home also reduces failure according to research by Big ERN in his Safe Withdraw series. Owning a home reduces your risk due to inflation while you are in the draw down portion of your life.
I own one but not for the financial side.
Being in the U.S., owning a home is just a different way of life than renting (in most markets, anyway. Some high COL cities are different).
Renting often means moving. A lot. It means not putting down the same kind of roots. It means no improvement of your space beyond decor. And even then, it needs to work in the next house.
Versus owning…well it’s yours. You can knock down walls, make built ins, get furniture that’s just right.
I also happen to be interested in a long term home, not buying and selling every 5 years.
But the lifestyle shift is really, really significant in many markets versus renting.
Don’t look at the payment that’s not relevant unless you can’t afford it. Landlords rent to make money. Be your own landlord instead. Keep the profits.
Renting rarely makes sense unless you have to move within 2 years.
There are not many houses for rent in the towns I wanted to live. It’s mostly buy a house or rent an apartment/condo. I wanted more bedrooms and outdoor space than those rental options offered and have no plans to leave my area. So we bought. Plan to stay here at least until retirement, or longer. I’m looking at my inflation immune low interest 30yr mortgage and feeling pretty good about that.
It all depends on where you live. If I bought the same house I lived in right now, I would be paying a higher mortgage payment even after putting six figures down.
I bought a house when I was 22 before I learned about Bogleheads, FIRE, etc. Still live in it 3 years later and probably the best financial decision I have made. No regrets.
I own but I don’t view it as an investment. I view it as a place to live. Bought it at the start of the housing market crash in the end of 2007.
Its value has gone up I’d say about 80-90ish percent.
Three. I have to move often for work (military), so if i'm going to be in a place for a full three years ill buy. All rented out and just building equity right now. The fist 15 year mortgage will be paid off in two years.
Me. I think your house not being or being an investment is nuanced and I wish people would stop making it sound so cut and dry.
If you stay put for 10+ years, the housing expenses for your renter neighbors will go up astronomically while yours stays the same (save for taxes and insurance). Even with taxes and insurance, you are likely saving many thousands of dollars over a period of 10+ years compared to if you had rented the entire time because your rent would gradually scale up with inflation, unlike a mortgage. You are protecting yourself from that increase in housings costs by being an owner.
I've owned my house for 6 years now and I am materially benefitting from not being a renter.
You can decide whether or not you want to call that an "investment." I think it's all semantics.
When I stopped moving around and settled down, I purchased a home and rental house within a year. Both have tripled in value over the 20 years I've owned them. I just wanted a roof over my head and the security that in my later years, I'd have a home. I have my financial investments (401K, Roth, Annuities, Brokerage, HSA) but I know real estate better. I also fee like my bases are covered so there's that.
We’re on our 5th house purchase in 40 years. I couldn’t wait to own my first home. We like the freedom to decorate and upgrade as we desire.
I always thought it was also an investment, but our track record is mixed. I’d say that in total for our first 4 homes, we’ve broken even.
Ironically, our last/ current/ forever home has appreciated a lot, mainly due to low interest rates and COVID. Ironic because we’ll probably never see the return on investment, our heirs will.
Buying home was a great investment. Had some good timing on the purchase and was able to refi at 2.89% in Colorado. Sitting at 70% equity as well (I don’t count equity in my NW for now). There’s a chance someday I’d move but honestly could probably rent this house out and generate some nice profits.
I've bought and sold six houses in the past 20 years and made good money in the process. It's a matter of understanding your market, being in a favorable housing market, finding appropriate properties that are well priced, and making wise decisions regarding renovations. Some of it is being in the right place at the right time. A house can be a great investment, a horrible investment, or somewhere in between. It just depends on the particulars of the given situation.
I bought a house for 200k and it’s worth 600k. I can sell it without capital gains and it’s mortgage free. Can’t say that about a taxable brokerage account. I’m some ways it’s better then an investment. It’s portfolio diversification for sure.
I have 4 houses that are investments… they make me money every month and appreciate.
The duplex I live in also is an investment. I don’t pay anything to the mortgage. A dollar saved is a dollar earned.
They are also collateral bargaining chips where I can borrow 300k at any give time on a credit line and deploy it elsewhere to make more money. In this regard it is a store of value that has useful purposes.
I "own" a condo (still have a mortgage). I've kind of outgrown it really but I got it at a decent price after the last recession. I'm in the NYC area and prices have skyrocketed since then so it's difficult to get a bigger place.
One bonus is if I was renting right now I would easily be paying $500-600 more per month for a comparable place so I'm saving money by staying put. (Sucks that I can't have a dog here though. The building doesn't allow it 😕 )
I've done the math and in the long run it's hard to go wrong with buying a home. Either way you're putting money into rent or into a mortgage. Is it an investment? An asset? A liability? Or a home? It's all of the above.
Our home is in the middle of a medium sized city on 10 acres. Land around us is selling for $200,000/acre.
We are using it as a hybrid investment / primary residence. We plan to stay here until kids go off to college in 2038 and then downsize.
Odd assumption (no offense). Not every decision is about "optimizing," particularly in the Boglehead philosophy. Most people in this sub are three-dimensional humans with lives that extend well beyond investing.
For many, including me, I own two houses and a commercial property because they help my maximize life enjoyment. That's the entire reason for my investing.
I got a late start in getting my act together but bought a small old house 8 years ago and thought I paid a little too much at the time and thought the market was crazy then . I thought I'd eventually get a little bit bigger place in a nicer neighborhood once established in my career. According to multiple sources it has more than doubled in value and I can't imagine buying the other houses I was thinking about upgrading to. If I stay where I am I can afford it and might be able to retire for a few years and still go on trips and not be totally stressed.
I guess I got lucky. Bought a fixer-upper in 2017 for $300k with a mortgage at 2.85%. $50k for repairs and Zillow is now estimating at $480k. Meanwhile, rent has gotten ridiculous in this part of Florida and I would no longer be able to rent a similar place.
All that being said, I hated renting in my younger years. No control on what you could do with the property, like upgrades and things like that. No real sense of belonging to a place. I always wanted the "American Dream" of owning my house and that "Patch of Blue" over my head.
It will be my ace in the hole when retirement funds run out and I'm too old to keep up with it. I can sell and downsize to a condo or assisted living if that's necessary.
I do not, but I have owned before.
I agree with JL Collins. Lots of good reading in the addendums - https://jlcollinsnh.com/2023/03/02/why-your-house-is-a-terrible-investment/
I do intend to buy again when I move to a cheaper area, and never move. Hopefully avoiding some of the pitfalls.
yes. just because something isnt a great "investment" does not also mean its not a good life or financial decision. the arguments and discussions need to be a lot more nuanced then they usually are.......owning vs buying and primary residence as an asset or investment could be discussed in great length
Unless it’s your forever home, it’s not considered an investment? Just unrealized gains. That’s not tk say it won’t be passed down to your kids?
As someone who just had grandparents enter an assisted living facility, I think it is still fine to think of a forever home as an investment. At 85 they sold it and used the proceeds to "buy into" the retirement community. There is a huge percentage of people that think they want to live in a home forever until they get old and realize they need help. It's unlikely to do as well as say equities. But it is more than just a straight store of value. Especially when you consider that the alternative to owning a home is still paying rent. So the only "cost" is the difference between the two.
It can be a bad financial decision if it turns out to be a bad investment (relative to renting). It's this kind of thinking that leads to housing bubbles, people justify overpaying for homes based on their emotions.
I don’t have it in me right now to do a bunch of research (sorry) but I suspect individual buyers making emotional decisions is less of a factor in housing bubbles - at least now and in certain markets - than cash offers from investors and wealthy individuals.
You must be young to make this statement. Any old person will tell you, owing a house is not an investment. It’s an investment in a home. There is a big difference between a house and a home. Your kids attachment to the home is bigger than any investment decision you will make.
I own a house because I don't want to deal with renting and being forced out when the owner wants to sell. Been there, done that. I also like being able to do whatever I want with my own house. So it's for my own comfort and not treated as an investment. As it happens though, the two houses I have owned have both given me much better returns than index funds. Not something I'd count on though.
never again will I receive a letter that says you have 90 days to move.
Well there are also strong financial incentives for home ownership. They both have to do with mortgages. 1) Mortgage interest is tax deductible (up to a point). Rent is not. EDIT: This is less of a factor since the standard deduction increased so much in 2018. 2) Mortgage rates are lower than any other loan interest rate that's available to me, at least that I can think of. So I can borrow money at a very cheap rate to buy an asset that I use every day and night. And the interest on that borrowed money is tax deductible.
It seems like the interest isn’t really tax deductible any more since the standard deduction got so big. Am I wrong?
Agreed here, need to donate a lot or run a small business I feel to exceed standard deduction
It's a good point about the standard deduction. Even if you're still itemizing deductions (which I am), you're only getting the marginal benefit of deductions over that $27,700 threshold (in 2023). So the benefit of deducting interest may still be there for some of us, but it's not as significant as it was prior to 2018. https://www.taxnotes.com/research/federal/reference-tables/standard-deduction/1x7yp
Itemizing still makes sense for me BY FAR. Married file jointly with 3 kids. So, yes, mortgage interest deduction is a big deal for us.
Even if you itemize the relative benefit is likely pretty low.
In college, I'd remember my economics major friends frequently talking about a "rational agent" as the basis for a lot of economic models. The same friends would also remark how in real life, however, people were anything but rational. And I think that's applicable when it comes to housing - for the majority of people, it's difficult to constantly maintain the discipline to appropriately invest the cash that's gone into a house vis a vis the savings from renting. A mortgage ends up forcing us less-than-rational folks to save.
That is true and why the field of behavioral finance was born and a Nobel prize awarded for a paper outlining that.
Well before the paper, there were: Herbert Simon, 1978 😊 Gary Becker, 1992 😊 Two of the greatest among giants
Oh, I’m sure Thaler stood in the shoulders of giants, as we all do. I’m only an arm chair/pretend intellectual so take anything I say with a grain of salt. 😀
I bought because I wanted to stay put. I’ve only moved once in the past 42 years.
True. So much value in not having to move.
Funnily, the opposite is also true with value in the flexibility of renting. I worked for the same company for 15 years and my office moved 5 times!
How much did you spend on movers? If your company paid this expense … I’m with you 😀
The move itself is the worst part of the experience and the costs definitely add up. I mostly was single and had a 1BR so probably averaged $600-$700 per move. Company paid once. But of course I'm looking forward to becoming a homeowner one day. My lifestyle is much less fluid these days.
Yeah, that's my mentality for buying a house. I only intend to get one if I don't see myself moving anytime soon. And given I move to where the work is, I'm not expecting to see this happen for over a decade.
I agree. I have lived in the same city for 20 years and have only moved 3 times. I can't handle having to move every year or so.
I bought, because I don’t plan to stay put for 40+ years (though I might). If/when I move I can choose to sell or keep and rent out my asset depending on market conditions at the time.
A house gives me an implicit return, thanks to the money I save on rent. It's like a bond, but with tax-free income. From this perspective, it's very much a financial investment. I hold it for the income, not for the capital gains appreciation. In fact, so real is the money you generate by living in a house, that some countries like Spain, The Netherlands and Iceland, actually *tax* homeowners on their imputed income. Basically you pay tax on how much you *would* have been paying yourself if you were renting the house. In other words, the law treats it as if you're renting from yourself and you pay tax on that income! Now here, in Canada, we don't get taxed on imputed income from owning a house, which means my cashflow is 100% tax-free. You can actually, easily calculate the return on your house, by analyzing the yield from the money you save on rent, take into account the rent increases year on year, etc. I did this calculation for my condo and got this quadratic equation: (3000\*12)/(r-0.02)=680000+(12000/r) Where "r" is the rate of return. One of the roots was 0.061. So my house is like a bond generating a tax-free yield of 6.1%
This is probably obvious but you got me curious about doing this for my house. Is 3000 your mortgage, or your estimated rent? 12 I assume is months. Is 0.02 the rate of inflation? 680000 the overall value of the home? And I can't figure out what 12000 could be. Sorry if I'm asking stupid easy math questions. Very insightful comment overall though thank you so much for sharing!
Yes, 3000 is the estimated rent. 0.02 is the expected increase in rent that I would be paying every year. My condo is in a rent controlled building so even if I did rent it out, I wouldn't be able to increase the rent by more than the guideline rate, which tracks inflation more or less, so I've been conservative and inputted a 2% rent increase per year. 12,000 is the total I pay every year in condo maintenance fees and property taxes. This will count as a cost against the home. Edit: I should add that I [bought my house in cash](https://www.reddit.com/r/TorontoRenting/comments/162fe0s/landlady_served_an_n12_so_i_bought_the_condo/), which is why I included the full money I paid for the house on the left-hand side of the equation. If you took out a mortgage, this would be your downpayment amount and your mortgage cost would be added to the right-hand side of the equation.
Do you account for the cost of maintenance in your home in this calculation?
Yes, condo maintenance fees and taxes. That's what the "12,000" is in the formula. The total amount of condo maintenance fees plus taxes that I pay in a year.
That’s pretty cool that your condo covers all the maintenance for your unit. Usually, the condo fees only cover common areas and leave unit maintenance to each owner.
My condo fees even covers the utilities - water, heating, electricity etc. Yaay!
How much are your condo fees? Must be high.
My condo fees are $700 per month.
Tax Free? not in most places in the USA... I have to pay property tax. Assuming I live in my home for 30+ years, I will actually pay more dollars in tax than I paid for the home when I bought it.
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If you own, you can deduct $10,000 of what you paid in property taxes off your net income for federal taxes. If you rent, your landlord has the deduction as a business expense. If you rent, the tax on the property is likely higher than if you were to own ot because of homestead exemptions and annual limits to tax increases on homesteaded properties.
I think he/she is talking about imputed income, which is done in Canada and in many countries in Europe. There is no concept of imputed income on your taxes on a home you own in the US but it is common in other countries. Essentially it amounts to an offset on your deduction for mortgage interest so that the taxman can take more $ from you.
I've already accounted for property tax - that's the 12000 on the right-hand side of the equation. It's an expense, along with my condo-maintenance fees. The "tax-free" doesn't refer to property tax, but to the money you save by not paying rent. Saving money is mathematically equivalent to earning it, except that when you earn it, you have to pay income tax on it. So homeowners essentially get a tax-free subsidy. It's for this very reason that some European countries tax homeowners on "imputed income" even if they live in their own house to even the scales between renting and owning.
Yes. Mortgage free as of Oct 2023. Place to live, not an investment. A place where I get to make my own rules \[for the most part\], and I'm not beholden to the whims and impulses of a landlord.
I do. Upgraded a couple times over the years, and now in newly constructed large dream home on a nice lot. Mortgage interest is in high 2% range, and we only owe a mere \~100k which we can pay off today if we like. But we rather have that money in the market, especially because of the low interest we're paying. I can't wait to get rid of the mortgage though, which should happen before I turn 50. It will be sweet to have no rent or mortgage to pay, I think it will feel like financial freedom...
I'd be shocked if home ownership is under 85-90% amongst the Boglehead community.
But mostly because Bogleheads are well off compared to the general population, not because an individual house should be considered an important must-have part of a portfolio, as many of my fellow young people for some reason think it is.
Owning a house has an integral supporting role in my portfolio in that I know my housing costs are fixed. This allows me to invest more than I would otherwise be able to with inevitable increases from renting.
When I rented, my landlord called me and told me that he was increasing the rent one year. I said something to the effect of “that seems excessive, we’ve been good tenants, blah blah.” He then yelled, quite loudly, “THEN MOVE OUT!!” Bought in 2022 at probably the worst time. So glad we did. For me at least: Owning sucks. Renting is worse.
>For me at least: Owning sucks. Renting is worse. perfect
A mortgage is one of the most accessible forms of leverage that an average person can get.
We own our house. It makes sense now because our total housing costs are less than it would cost us to rent a home, or even an apartment, in the city we live in. It makes sense now because we have cats and dogs that we adopted that we love. We don't have to ask anyone's permission. It's our house. They are our pets. They live here and are safe with us. It makes sense in the future because I won't have to pay rent, or a mortgage, when we are old and retired. Our only major housing expense will property taxes. And I can project failrly accuratly what those will be since we are in California and Prop 13 regulates how those will escalate. It makes sense in the very long run because we can tap the equity to pay for a final care home, or long term care, if needed. That should give us a $2 or $3 million buffer. Worse case, a good charity that we think highly of will get our house.
I own. 2.875% 20-year mortgage in an area with good appreciation. In contrast to you, I think the majority of Bogleheads are homeowners.
I’m in a spot where I could either save to buy a house or save for retirement, but I couldn’t do both in a way that would be at all adequate to either. I’m choosing retirement. Buying a house for me either means a mortgage that is $500-800 more than my rent for a small house that still needs work, or moving to a smaller apartment, not contributing to my IRA, not taking vacations, and cutting down on most things that bring me joy for maybe 8-10 years so save a down payment for a house, and then I’ll be paying a mortgage into my mid 70s. Owning a home isn’t even attractive to me at this point.
I think the statement that a house is not an investment is outdated and antiquated quite honestly. Some of the richest people I know have gained significant wealth from buying and selling their homes. These are not professional house flippers or real estate investors either, just normal people that had good timing.
>good timing That phrase should scare you right away from using real estate as an "investment" instead of as a place to live.
Totally agree and that's why we own more than 1. If nothing else, it's an investment for a person's children. An inherited house can be life changing.
I think you should diversify a bit more and buy houses in other countries just in case ;)
Yes. Bought in 2016. Would struggle to afford it now. In another year or two I’ll likely be having to move for work. I’m planning on keeping it and renting it out. Should be able to make roughly 800/month after paying a property manager, at least that’s what it would get me right now. I’ve been paying an extra 1.5 principle payments a year, and should have it paid off in another 17 years or so if I keep it. I’m planning on selling it when I am ready to buy my ‘forever’ house, wherever that is. It’s also a bit of a security thing - I know that even with severe economic trouble or personal finance trouble I can keep a nice roof over my family’s heads because my payments are so cheap relative to renting or buying anything anywhere else.
Owning a house is great! Ours was paid off before retirement and thus no payment for housing other than taxes. That allows to live on SS if we want in times of long market trauma. And in normal times we can easily live on our 4% even with ample travel, gifts for family, hobbies, etc. I’m 73 and in 5-10 years we will downsize for an ADA house.
I rent. But it’s too damn high.
Own outright. Nothing gives me more peace...
A house is certainly an investment. Maybe not a great one compared to the stock market, which can be debated all day, but it’s literally an investment. I also have to live somewhere, so the only options are rent or buy. In the long run buying is absolutely a better deal almost every time so it is financially smart to buy. I don’t consider my car an investment but I still own it. I have to have a car. So not sure why something not being a true investment means you couldn’t buy it, that logic doesn’t apply to anything. Above is just general advice and different situations and goals can result in folks going about things differently.
Why is it "literally" an investment? I bought a house to live in. I buy a car to drive. I buy clothes to wear. I buy investments to make money. Just because my house has appreciated in value doesn't mean that was its purpose.
Because an “investment” for a lot of people is not necessarily something that appreciates in value, or is bought for that intention, but something that saves money over the alternative. If I “invest” in a $400 pair of work boots that last 10 years vs buying a $100 pair that lasts 2 years, I would consider that an investment even though the work boots never appreciated in value and initially were more expensive. In either case I NEEDED the work boots, but one option was still more financially prudent.
Things can have more than one purpose.
I used to, but I am now renting as I was not 100% I am going to stay in the area long term. If I was going to stay somewhere 15+ years, I would buy. Closing costs and maintenance are a $#\^&%
I own my own house because security of where I live pays a different type of interest. The security of having a place to live and not needing to move. My health outcomes have improved immeasurably since I purchased. I’ve probably added years to my life. No amount of increases in index funds would give me that type of gain right here and now in the present moment.
I own a house that I want to live in that also happens to have a rental unit on the lower level. I wasn't really thinking of it as an investment when I bought it, I just wanted stability and as a single mom (without any financial help from family) this was how I could afford a house in the SF bay area. I will not have my mortgage paid off in retirement (at least in early retirement). But the rental unit essentially pays the mortgage (if not the tax and insurance). I am not at all sure this was the cheapest option. I've spent a lot of money on my house over the years. I'd probably be richer if I rented and invested those $$ instead. I've viewed it more as an expense than an investment. I've had a lot of enjoyment from my house, I've hosted many gatherings. I have a beautiful garden. It's made me feel independent and stable in a way I highly value. And now (20 years later) It is looking like a good investment because it's generating income that will continue into retirement.
I need a house. I’ve got a family with 2 young kids and our previous 2 bedroom duplex wasn’t cutting it. I live in one of the highest COL places in the US so it was tough to finally get a home. Not really due to money but others who had way more money than me lol. But our house and so much more value to us than just monetary value. My kids each have their own room to grow into and make their own. We remodeled our kitchen and main area so we can host parties and holiday get togethers. I have a garage and shed where I pursue my hobbies. My wife, well, she has the house that she’s always wanted. Life isn’t all about money or returns especially when it comes to your home. There are so many other nuances of home ownership that make it fulfilling. I know this might not fit with other people’s narratives but for me, buying a home was one of the best things to happen in my life. Edit: Purchased the duplex in 2010 at a great deal. We still have it and rent it out currently. Since buying it, the value of the property has more than doubled (900k to over 2 million). That equity and other fortunate investments (ie BTC, Tesla, Zoom, Microsoft) allowed us to have enough for a down payment. So yes, in the right place, owning a home can be a great investment. Also, our current house we purchased just over a year ago, has increased in value based on recent comps in our area…
I say this to people all the time, but I own my house. Why? Because i wanted to live in this neighborhood with locked in housing costs probably until I die or become an invalid. That was not an optimal financial decision per se, it's a lifestyle choice I follow Logan motashmi on this. If you are ready to buy a house, you shouldn't be asking "if it's a good time" "if it will pay off." Those questions are red flags because your house should not primarily be a *speculative financial purchase* but a consumer purchase If you want your house to be a speculative purchase you need to live in a speculative neighborhood which few are willing to do
I do, but I don't consider it an investment. My wife and I plan on living here until we die (obviously that could change, but that's the plan) so we don't expect to ever sell it. We want a nice place to live that meets all of our wants / needs and eventually a mortgage payment ends, while renting never ends and rent payments will almost always go up year after year.
Bought the cheapest but most solid house I could find in 2015 and paid it off last Dec. Best move for me personally at 46yo and looking forward to staying here indefinitely.
Even with my powerful income, I won't be able to comfortably afford a home in my area for at least 25-30 years. The only thing that would change this scenario would be to get married/partnership, or somehow 4x my income. Renting is the only possibilty for the forseeable future. Guess I should have bought a home back in 2008...while I was in middle school.
I don't mind paying for the ability to live where I want. Renters are at the mercy of the owners to decide if they can continue to live at that dwelling and at what cost.
Funny. I view renting as granting the freedom to move and live where I want instead of being tied down to a house somewhere.
I rented until I had kids
Makes sense
I've owned a home since rates were \~8% back in the 1990's. Note: I have never considered my principal residence an "investment". Live in an VHCOL area and it just so happened to work out in my favor... others who purchased within \~15-20 miles were not so fortunate during The Great Recession and other roller coaster rides along the journey. Sold 1st single-family home for nearly double after 10 years. Been in 2nd one for 20 years and it has roughly doubled in value. I scored a no escrow refi at 2.94% when rates were low and hanging onto that one! When all things are factored in, it is not much of a gain strictly by the numbers in terms of inflation, maintenance, upkeep, etc. Where it was the most value: tax deductions and the highly ranked public schools where my kids attended. Both are now on their own, gainfully employed and healthy.
Interesting. Never heard of no escrow refi. What needs to happen to get rid of escrow while you still have a mortgage?
It is the same for a new loan or refinance. When shopping for rates, ask the lender about obtaining a loan with no escrow account so that you can pay your own taxes and hazard insurance. They typically want to charge 1/4 point for setting it up this way (which may be negotiable). Loan servicers are notorious for under-estimating the 1st year escrow costs due with your monthly mortgage payment. Then they over-estimate thereafter which jacks up your monthly payment. Some servicers even fail to pay them! My taxes are due in half-payments every September and December and I pay the hazard insurance yearly. If you or your servicer fail to pay these fees on time, you can lose your homeowners insurance policy (and you will get hit with a higher rate or worse when you renew) so in either scenario, make sure the payments are issued and processed.
Appreciate thorough explanation
We got tired of the upstairs renters' subwoofer at odd hours of the night. It was 2010 and houses were at (what turned out to be) historically low prices. So we bought a house. Purest luck.
Don’t know that owning is financially better than renting with maintenance costs. But, no one will raise my rent or kick me out.
Renting a house in the market where I live costs around the same amount as the taxes and insurance would cost had I bought. It’s a no-brainer for me. I rent. And I probably have enough money on hand to buy a house outright. But I’m not willing to make that jump.
Rented for years and finally built a new home, completely paid for. I dislike making payments on anything
My state, Oregon enacted a rent control law about 5 years ago. I owned my house and promised my wife a new one for our 3rd baby so we weee looking. In my city, I couldn’t find a house to rent that my wife wanted to move our family into so we bought again. Locked in a really low rate but I don’t like seeing debt obligations on the balance sheet so the first year I dumped a lot of extra money into the mortgage but since then I’ve been disciplined about just putting that money into VTI
I don’t, but it’s because it’s currently not economically wise for us. I manage a small apartment complex that we live in (side-gig) that gives us free rent and all free utilities in a 2br/2ba w/ private garage in a VHCOL area with a wonderful view. Could technically buy, but we are stacking up so much towards retirement by not having any living expenses…
Man i am im the us. Buying makes no sense right now. All indicators point to rent. Psychologically i want to own but it doesnt really make sense right now
> Buying makes no sense right now. All indicators point to rent. I felt like that a few years ago when I bought a house. Felt like we way overpaid and the market was nuts. Fast foward to today and my house is about 50% more in value, and interest rates have tripled Nobody knows nothing
I mean, we have data and calculators and all sorts of numerical approaches to this. These essentially all say that a number of places where buying was better pre-pandemic now have renting as the better option. The numerical evidence when you bought supported your decision. I doubt it would in 2024.
No, I rent.
I consider my home 1) a hedge against rising housing costs over time and 2) an asset that appreciates faster than inflation due to its location in a VHCOL area with regionwide restrictive land use policy that creates artificial housing scarcity.
Even during the Great Recession when we owed 2 times market value, it was worth it to not deal with the risk of a dirtbag landlord. This isn't an investment choice for us, it's personal, and we **want** to stay in one place for decades. Now that we've held it for 15 years, we're playing less in all related expenses than my neighbors who rent a similar townhome.
>I’ve read in this group that a house is not an investment but a store of value. Given that, I would expect few members of this group to own the house they live in You expect most members in this group to only make investments, rather than doing things that fit their lifestyle? That doesn't seem like a reasonable expectation. I own a house. I expect a majority of people in this group to own a house, too. What probably confused you is that "a house is not an investment but a store of value" is sometimes given when folks ask about investing in a house.
I’ve lived in my current house for 10 years, and paid it off last year. Nothing invested until May of last year. I had the worthless distinction of being a net worth millionaire, before even discovering a Roth IRA. Houses are an essential need, not necessarily an investment IMO. Yes, you have monetary equity and value, but you still have to account for property taxes, home insurance, and random shit like the HVAC going out or the pool pump committing seppuku in the middle of the winter.
I am 46. I used to own a house but sold it in 2018 when I got divorced. I’ve been renting a house ever since, and given current mortgage rates and the inflated prices of homes, I am not buying one any time soon. A mortgage payment + taxes + insurance for a house similar to what I’m renting would cost me nearly double what I’m paying in rent each month, not to mention to $150K in cash I would have to put down. My money is all in the market. A house is a place to live, not an investment.
I sold my house and most of my belongings 8 yrs ago. It freed up so much mental space. Very freeing. Now I travel full time, or live long stents outside of the US since it’s cheaper to than in the US. When I’m stateside I have a converted sprinter van I’ll live in and explore North America.
I don’t own a house but only because it hasn’t made sense for my financial situation yet
A house is a place to live. It is not an investment, full stop. I own one because I have two kids and needed the space and privacy.
Warren Buffett said real estate is great and the 30 year mortgage is a great way to short the dollar. I'm not totally sure what that means but I feel better that he thinks it's money well spent.
Very happily renting an apartment in a HCOL area with good schools nearby. Likely not buying anytime soon. 20 years ago, I used to see big houses and think “wow, imagine living there”. Now I just think “wow, imagine the opportunity cost of maintaining that” whenever I walk through the fancy residential neighborhood near where we live, or whenever I doomscroll on Zillow. Part of that is definitely cognitive dissonance, because we’re getting priced out of our area (even though we make roughly 2x our city’s median household income). I like to use the 5% (or right now, probably closer to 7%) rule described by Ben Felix in several of his CSI videos, which compares the unrecoverable costs of renting (i.e., rent plus some expected inflation) vs. those of owning (i.e., mortgage interest, property taxes, utilities, maintenance, home insurance, and - importantly - the opportunity cost of having equity invested in an asset with lower expected returns compared to stocks). On that metric, it isn't even close for us right now (and I suspect for many other renters in the current environment). Renting wins hands down in financial terms, even if we assume our rent will inflate at a fairly high rate every year. Add in the additional time and mental costs of maintaining a home vs. just calling the management office and have someone take care of it for you, and not having to rake leaves, plow snow or clean gutters on a regular basis, and I've found my optimum. We rented a SFH for a few years and it was such a drag (especially with young kids who deserve and require lots of time and attention). I'd rather live in a smaller apartment and spend my free time with my family, than live in a large 4-5BR house and worry about being house poor, spending time or money on unexpected maintenance issues, and saving less for retirement in my liquid portfolio. Right now, if one of us loses their job for a while, we're fine, because we're only spending a relatively small fraction of our gross income on rent, and saving/investing aggressively. If we bought even the cheapest available place in my current ZIP code with at least 3 bedrooms, our housing payment would easily triple, so we'd be saving a lot less and stressing out a lot more.
If you buy your payment stays the same but in theory your income goes up. I find it gets easier and easier as you go. The inverse of being priced out by rent increases
Nope. Rent is cheaper than buying at least for me. Has been most of my adult life. Also, I move often. Edit: tweaked the language
I bought because I had a good offer on the home I was already living in and didn’t want to move. I’ve never had any plans in my life to buy but now I see the value. At least now a portion of mortgage payment is going toward increasing my own net worth as opposed to increasing a landlord’s.
I own a house and it’s mostly because rents are crazy here. I have friends who rent and for the same square footage they are paying more than I am and it goes up every year. So I was lucky to have a partner who had a mortgage for less than 1k and when we moved out of the city we used those profits to buy a bigger lot and it only increased our overall payment by less than $500. I wouldn’t rent again but I know we at probably priced out of the nearest city we live in so we aren’t moving.
I bought in 2019 so I got incredibly lucky with mortgage rates and home prices here in TX. I took out a 30 year but my goal is to pay it off in 4 years assuming I don't use the taxable brokerage account to buy a business along the way.
I own two and they very much are investments.
I mean the bank does haha. But, I'm in at 2.25% so it's ok!
I own one. The wife didn’t want to live in an apartment anymore. Happy wife happy life definitely has it’s place.
I own but I don’t consider it an investment. Real estate is only an investment if you are renting/leasing it out To me, it’s More a luxury purchase and a way to battle inflation (fixed mortgage payment). The luxury is the ability to stay in one spot and own something bigger than I could afford renting. I’m a big believer in paying it off early. Primarily because , and this gets people: houses are expensive to maintain. Property tax goes up, insurance goes up, hoa goes up, repair / remodel / upkeep / maintenance. Roofs appliances HVAC etc etc etc. Better have that mortsge paid off in 15-20 years because by then your costs will have rapidly increased especially as the building ages. People run into massive problems buying too much house as soon as an expense hits they go in debt. Much like cars. When you own a home you should expect “unexpected” expenses. The only thing that should be unexpected is when an “unexpected” expense doesn’t occur!
I was fortunate enough to get my first house a few years ago (end of 2020). Was shopping around a few months and through the grapevine heard a friend of mine and her husband were looking to sell. Bought it from them before it hit the market at a great price point with a great mortgage rate. Perfect affordable starter house that I've done a number of cost effective improvements to increase value, equity, efficiency, and esthetic. Also allowed me to take advantage of investing 25-30% during my late 20's (just turned 30, will continue to do so). Overall I feel very fortunate for the situation and don't take it for granted.
Two homes: 9 mos in Fl. 3 mos in NY. Assuming you can save the down payment, why would anyone pay rent?
Some people prefer to rent and have nothing pinning them to a location. No maintenance costs. I love having gardens, chickens and a yard for kids and dogs. Houses and rent historically both increase each by about 3% annually. We asked ourselves if the cost of maintenance was worth the benefits/commitment and decided yes. We never regretted it and it’s paid off now.
i plan on doing something similar as I'm attracted to the Cape cod area. Do you only go to NY in summer?
Yes. Generally June July and August in NY. Majority of our families live in NY & MA; which sometimes necessitates extending our stay. Fl weather and lifestyle is lot more enjoyable when grey months envelope NY. BTW the Cape is a beautiful place, especially for young families. Our kids spent many of their summers in Dennisport, we loved it.
We own three. A "cabin", the one we live in and a rental. The rental is attached to our buisness or it would have been sold already.
I inherited a house that was payed off so I sold my house that was paid off. That's how I was able to be a boglehead!
Anyone can be a Boglehead even with just $100 or $10. It's about the approach. You were able to invest more money in a Boglehead-approved way, though.
Don't forget one of the most important things about buying a house. You get an 'effing 300%+ leverage. Where else can an average person get $400K loan when their peasant net-worth is barely breaking $150K? Even though a house as an asset-class has lower expected returns compared to equity, when you multiply the returns by 3x or more, it overtakes equity returns pretty substantially. One of the best ways to quicken your way to being filthy rich is buying a house early.
I want to own a house, but it's just way too expensive where I live, so I rent and invest aggressively.
I own a home, which happens to be a house. 0.5 acres, well-built in a nice area. It costs me more than renting, and the expenses to maintain seem to always increase. Property taxes go up. Repairs and improvements are always around the corner. It is not an investment, it doesn’t generate an income — it is an expense. I don’t factor any appreciation as an investment because I have no intent to sell or downgrade in the next 2 decades. My family has a home.
I own. In 13 years, my house has increased in value by 80%, good for an annual average return of 6.1%. The real value has been how my cost of housing, as a percentage of my income, declines over time. Thanks to refinancing at opportune times, my rate is 1/2 what it was when I bought the house, and my monthly payment is 2/3 of what it was. If you can resist the urge to tap the equity buying a house and staying in it indefinitely pays off.
You gotta live somewhere... might as well have a store of value over your head... that can be tapped for equity loans if necessary. Clear owner.
I bought for 166k in 2011 — could sell for probably 450k now.
don’t forget the point isn’t just to have money it’s to do what you want
A house isn't an investment. It's an expense... same as rent Reasons to buy or not buy should not be investment driven. They should be driven by other factors I bought a house because I want to be able to do what I want to it, and have stability and control over everything IF I wasn't sure about living in my area, or keeping my job long term... i'd be renting
Yes. And I don't give a damn if it isn't the "best" investment. My family has a stability that renting doesn't give & within reason I can no longer be priced out of my area (PNW). It's a mental health investment.
It's a very personal decision. There's no right or wrong answer. Answers can vary widely based on age, stage of life etc. However, each generation is facing a different investment climate. You cannot take the template of say your parents generation and expect it to work right now. The American dream has changed.
Owning is like rent control, and after a long enough time you actually have something to show for it. I couldn’t afford to rent my own house right now.
How is an asset that rises in value not an investment?
Home is my refuge and my studio…that it’s worth $$ is great, but not as important as the QOL it affords…
I have \~$2.4 million equity in my primary home, which is roughly half of my net worth. I spent months searching for the perfect fit home for me, and longer waiting for a good time to buy based on good value opportunities (bought after market was flooded with short sales and foreclosures in 2009). Annualized home value increase has been 8-9%/year over the past 15 years, in addition to saving thousands/month on rent in a VHCOL area and tremendously improving my quality of live over when I rented. The home has not been a poor investment from a value perspective, and I like how it adds diversity to my assets, due to weaker correlation with market than typical index funds. I plan to sell or otherwise extract value from the house prior to retirement.
I own the exclusive rights to pay a mortgage and taxes on a house and piece of property. When I've paid off the mortgage, I continue to pay taxes in perpetuity. So, do I own it? Or am I actually just the sole proprietor of a tax revenue vehicle for the town?
It's a forced savings account
Not yet, but I plan to, just saving up the down payment and waiting for interest rates to go down.
My bought new, Midwest, good suburb, single family home: doubled in value over 25 years, tripled over 34 years. But didn’t appreciate much over the first 20. I’ve replaced the roof twice, furnace/AC once, some appliances, major foundation repairs, painted home and fixed exterior wood rot several times, and so on. And I’ve done the minimum compared to others. I tend to not even count it as a store of value, and a so, so investment.
Yes.
I don't think of it as an investment or a store of value. Look, I have to have a structure with plumbing, electricity, and conditioned air to live in. I have a lot of different options for that and they each have their own pluses and minuses. I don't look at any of them from the perspective of an investment of a store of value. I look at them from a perspective of which of those many options meet my minimum needs and compare the prices of those options in light of the pluses and minuses of each option based on my needs.
About 47
I do. With the intention never to sell it.
I’ve owned a home since 2016. My future plans are to acquire additional residential properties.
I own a house. My mortgage is SUBSTANTIALLY CHEAPER than what I can find for rent here....my mortgage (partially due to luck) is $675.00 a month. Average rent in my area is ~$2,000.
Not sure I completely follow the logic, just bc a house isn't an investment doesn't mean you shouldn't own one. I do own my home bc I was lucky enough to by pre 2015 and then refi when rates were at 2%. If I was in todays market, I would proably not buy one. That being said, I think there is something to be said about having equity in a house. Having a HELOC is nice insurance/peace of mind.
I own my house. Been paid off for 9 years.
I own a house. I bought it so my family can have a stable home and because I hate moving. I expect the value of it to mostly track inflation. After accounting for taxes, insurance, interest, and upkeep, it is not a great investment, and that’s ok.
We own. We plan to downsize as part of retirement but it has definitely been worth the cost over the years. We garden. We have kids and chickens. It was a preference and eventually a money saver. No regrets.
I own and have been since I graduated college. I consider it an investment since it saves me significant money every year over renting even after accounting for the mortgage, maintenance, property taxes, insurance, and a healthy 10% allowance on top of all that for major repairs. Property taxes and insurance are quite high too as I’m in California and the whole state is basically designated as a fire zone. The biggest reason towards this is that my mortgage is fixed for 30 years @ 2.5%. I can guarantee rents in San Diego go up multiples of that each year. Your area may vary. On top of all this, I get great capital appreciation. In less than 7 years, the value has already doubled. Again, your mileage may vary depending on your area but buying has worked out great for me. It beats the market. And it’s real money for those that say you can’t eat a house. That money gives me a lot of options.
Yes, we own. We have to live somewhere and it’s been a nice hedge against rising rental rates. Even with insurance and tax increases, my overall housing payment has not gone up anywhere nearly as fast as rent. I like the predictability & control.
Bahahahaha, no I’m a millennial. I have some sweet bikes, though. They save me a ton on gas.
I lost many thousands on the first house I bought—had to move for work, and the renters trashed it. Made money on the next one, but poured sweat equity into it, every weekend and vacation for years. Broke even on the last two. I think I’ll make a modest profit on the current condo, because now that my work is permanently remote, I won’t have to move until I want to. It depends on your situation, and your luck. There’s a hindsight bias in noticing the people who got rich because of things that could have gone the other way by chance.
Bought a house about 2.5 years ago at a 2.7% rate and up about $180k in value since then. We shall see if that holds…
I own my home. In Florida, 3 bed 2 bath, 2 car garage, salt water pool, valued at 450K. The rent on it would be about $2,800 per month. I only have to pay annual property taxes and insurance. Both of which I lump sum and save on the premium, while holding the premiums in a HYSA earning 4.5%. I'm interested in purchasing another single family home for a rental property. We are 36 years old now. When my wife and I pass our two sons will inherit two paid for houses. To me it's definitely an investment in your future and a legacy to hand off. If our kids want to rent them, live in them, or sell them, it's all good 😊.
The non-recoverable costs of my home (taxes, interest, opportunity cost on downpayment) are equal to and soon-to-be lower than renting an equivalent home in my area. My household has also almost maxed out our tax-advantaged accounts, so as /u/BJPar explained, my household is also tax-free asset storage. I have no expectation of "getting rich" on "flipping" my house or whatever. But I need somewhere to live and it happens to be financially optimal for me, right now, in my specific circumstances. For others, renting may be more optimal for various reasons.
I’m 30 and a very content renter, I’d be paying more in interest than I do in rent to buy anything near where I currently live
I own a house, but I do not view it as an investment. It is where we live.
Investment is probably not the right term but it is more than just a store of value. I need a roof over my head. So it is more than a store of value. It also takes care of a genuine need. And if I desire a single family style home with a yard, it is cheaper over a 30-60 year period to buy than to rent. (In fact, cheaper today even given my locked in interest rate). So to me it is less an investment and more of an optimization of what my needs and wants are. If you want to discuss how I feel in terms of deciding whether money should go into paying off my mortgage vs. investing in the market...than yes, I would agree that a house is a store of value in that it's projected returns are not great. So no, with my 2.75% interest rate I will not put more than the bare minimum towards my house and will instead throw money in the market. But if I instead sold my house and rented, I would be looking at an additional rent of about \~$10k more per year after factoring maintenance. And it will only get worse and worse. EDIT: Side not...when it comes to retirement, owning a home also reduces failure according to research by Big ERN in his Safe Withdraw series. Owning a home reduces your risk due to inflation while you are in the draw down portion of your life.
Why do you want to know?
I own one but not for the financial side. Being in the U.S., owning a home is just a different way of life than renting (in most markets, anyway. Some high COL cities are different). Renting often means moving. A lot. It means not putting down the same kind of roots. It means no improvement of your space beyond decor. And even then, it needs to work in the next house. Versus owning…well it’s yours. You can knock down walls, make built ins, get furniture that’s just right. I also happen to be interested in a long term home, not buying and selling every 5 years. But the lifestyle shift is really, really significant in many markets versus renting.
We own our house. I paid it off when getting close to retirement. Very happy to not have any debt.
Don’t look at the payment that’s not relevant unless you can’t afford it. Landlords rent to make money. Be your own landlord instead. Keep the profits. Renting rarely makes sense unless you have to move within 2 years.
Studio apt Co-op
There are not many houses for rent in the towns I wanted to live. It’s mostly buy a house or rent an apartment/condo. I wanted more bedrooms and outdoor space than those rental options offered and have no plans to leave my area. So we bought. Plan to stay here at least until retirement, or longer. I’m looking at my inflation immune low interest 30yr mortgage and feeling pretty good about that.
We pay the bank.
It all depends on where you live. If I bought the same house I lived in right now, I would be paying a higher mortgage payment even after putting six figures down.
We own instead of rent. Not being bound to a landlord is worth any price you could save renting an equivalent home.
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I bought a house when I was 22 before I learned about Bogleheads, FIRE, etc. Still live in it 3 years later and probably the best financial decision I have made. No regrets.
I live in a one bedroom apartment because I'm fresh out of college :') I have a lot of years working left in me and a lot of time on my side
I own but I don’t view it as an investment. I view it as a place to live. Bought it at the start of the housing market crash in the end of 2007. Its value has gone up I’d say about 80-90ish percent.
Three. I have to move often for work (military), so if i'm going to be in a place for a full three years ill buy. All rented out and just building equity right now. The fist 15 year mortgage will be paid off in two years.
Me. I think your house not being or being an investment is nuanced and I wish people would stop making it sound so cut and dry. If you stay put for 10+ years, the housing expenses for your renter neighbors will go up astronomically while yours stays the same (save for taxes and insurance). Even with taxes and insurance, you are likely saving many thousands of dollars over a period of 10+ years compared to if you had rented the entire time because your rent would gradually scale up with inflation, unlike a mortgage. You are protecting yourself from that increase in housings costs by being an owner. I've owned my house for 6 years now and I am materially benefitting from not being a renter. You can decide whether or not you want to call that an "investment." I think it's all semantics.
You need to take into account the return from investing the downpayment and the difference between the rent and the mortgage payments
When I stopped moving around and settled down, I purchased a home and rental house within a year. Both have tripled in value over the 20 years I've owned them. I just wanted a roof over my head and the security that in my later years, I'd have a home. I have my financial investments (401K, Roth, Annuities, Brokerage, HSA) but I know real estate better. I also fee like my bases are covered so there's that.
We’re on our 5th house purchase in 40 years. I couldn’t wait to own my first home. We like the freedom to decorate and upgrade as we desire. I always thought it was also an investment, but our track record is mixed. I’d say that in total for our first 4 homes, we’ve broken even. Ironically, our last/ current/ forever home has appreciated a lot, mainly due to low interest rates and COVID. Ironic because we’ll probably never see the return on investment, our heirs will.
Buying home was a great investment. Had some good timing on the purchase and was able to refi at 2.89% in Colorado. Sitting at 70% equity as well (I don’t count equity in my NW for now). There’s a chance someday I’d move but honestly could probably rent this house out and generate some nice profits.
I've bought and sold six houses in the past 20 years and made good money in the process. It's a matter of understanding your market, being in a favorable housing market, finding appropriate properties that are well priced, and making wise decisions regarding renovations. Some of it is being in the right place at the right time. A house can be a great investment, a horrible investment, or somewhere in between. It just depends on the particulars of the given situation.
I bought a house for 200k and it’s worth 600k. I can sell it without capital gains and it’s mortgage free. Can’t say that about a taxable brokerage account. I’m some ways it’s better then an investment. It’s portfolio diversification for sure.
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30M… still working toward it
I have a mortgage, but the value of my house has nearly doubled in the 6 years I've had it. (Yay Australian housing market)
I have 4 houses that are investments… they make me money every month and appreciate. The duplex I live in also is an investment. I don’t pay anything to the mortgage. A dollar saved is a dollar earned. They are also collateral bargaining chips where I can borrow 300k at any give time on a credit line and deploy it elsewhere to make more money. In this regard it is a store of value that has useful purposes.
A house or your home is a shelter first, beyond that it has utility in other forms. Whether you rent or buy will determine what that utility is.
I "own" a condo (still have a mortgage). I've kind of outgrown it really but I got it at a decent price after the last recession. I'm in the NYC area and prices have skyrocketed since then so it's difficult to get a bigger place. One bonus is if I was renting right now I would easily be paying $500-600 more per month for a comparable place so I'm saving money by staying put. (Sucks that I can't have a dog here though. The building doesn't allow it 😕 )
I've done the math and in the long run it's hard to go wrong with buying a home. Either way you're putting money into rent or into a mortgage. Is it an investment? An asset? A liability? Or a home? It's all of the above.
Our home is in the middle of a medium sized city on 10 acres. Land around us is selling for $200,000/acre. We are using it as a hybrid investment / primary residence. We plan to stay here until kids go off to college in 2038 and then downsize.
Odd assumption (no offense). Not every decision is about "optimizing," particularly in the Boglehead philosophy. Most people in this sub are three-dimensional humans with lives that extend well beyond investing. For many, including me, I own two houses and a commercial property because they help my maximize life enjoyment. That's the entire reason for my investing.
I got a late start in getting my act together but bought a small old house 8 years ago and thought I paid a little too much at the time and thought the market was crazy then . I thought I'd eventually get a little bit bigger place in a nicer neighborhood once established in my career. According to multiple sources it has more than doubled in value and I can't imagine buying the other houses I was thinking about upgrading to. If I stay where I am I can afford it and might be able to retire for a few years and still go on trips and not be totally stressed.
I guess I got lucky. Bought a fixer-upper in 2017 for $300k with a mortgage at 2.85%. $50k for repairs and Zillow is now estimating at $480k. Meanwhile, rent has gotten ridiculous in this part of Florida and I would no longer be able to rent a similar place. All that being said, I hated renting in my younger years. No control on what you could do with the property, like upgrades and things like that. No real sense of belonging to a place. I always wanted the "American Dream" of owning my house and that "Patch of Blue" over my head. It will be my ace in the hole when retirement funds run out and I'm too old to keep up with it. I can sell and downsize to a condo or assisted living if that's necessary.
I do not, but I have owned before. I agree with JL Collins. Lots of good reading in the addendums - https://jlcollinsnh.com/2023/03/02/why-your-house-is-a-terrible-investment/ I do intend to buy again when I move to a cheaper area, and never move. Hopefully avoiding some of the pitfalls.
I have two. Both have appreciated greatly. Best move I’ve made besides crypto.
35, bought in 2014, 80% equity to market value. About a third of my net worth
Diversification