Home Ownership as an Investment

General thread for related topics.

Specific topic to start with - how are you thinking about this in terms of your overall portfolio or future retirement plans?

Many of us owned homes through the housing crisis at the end of the 2000s. At the time this seemed to go against the idea of owning a home as a way of saving. I was lucky enough that I bought my house long enough before the crash that I had some remaining appreciation and used the opportunity to move on from a starter home. Now my house is worth about twice what I paid for it, which tracks with the general increase in median prices nationally.

My kids will one day move out, and I can downsize. Now, this could potentially end up being a smaller house that is some combination of better location and more interesting such that price is roughly equivalent. I could also downsize into something that I could buy outright and walk away with a chunk of cash on top. For now I can let my 3% mortgage ride out as long as I own the house. This seems like a good “investment.”

I could have also kept my first house. It was nice enough, in a good enough neighborhood, etc. The Zillow value of that house plus the accumulated difference in payment invested monthly in the S&P would be roughly 900k today. +/- assumptions about dividends, taxes, etc. I instead have around 400-450k in home equity. Seems like a crap investment.

I suppose my conclusion is that yes, my home is relevant from a net worth perspective and gives me some flexibility in the future, but that there has been a pretty big opportunity cost to ownership.

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If you avoid the bubble like was seen in 2008 . . .

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Cool story Prez.
My kids are awesome and I would let both live with us the rest of our or their lives.
One son is out of the house with his gf, so that seems to be a done deal.
My other son likes to travel, so much so that his renting a separate place and not living in it for three or four months out of a year (he “works” on his “vacations”) seems financially stupid, so he is still with us (I need to up the rent, though).
If he were to leave, I would consider renting out two rooms to students from a nearby college. That is what I’m wasting, financially, at the moment.

Were you going to live somewhere else for free?

Checks notes:

…sure, it was an unlucky time to buy. Right now could be an unlucky time to buy as well.

Kids future life choices will impact longer term housing needs, but I think it is fair to expect that they will eventually move out.

Restrictions on locations once they are through school allow for options as well.

I don’t consider my house at all in retirement. Over 6 years its grown in value from the $272.5k we paid to about $475-500k (verified by the sale of the 3 nearest homes, which are very similar, at comparable prices.)

We may eventually decide to buy a larger home, as this one would be slightly small for us and 1 kid. That said, two of our neighbors have 2 kids each in homes of very similar size and they may wish they had more space but it’s clearly going fine.

If we don’t buy a nicer home, I might live here until I die. I may instead choose to sell and get a condo where the lawn is mowed and snow plowed, but it’s not factored into my savings. If I do that it would likely be because our kid moved away and we agree about us moving closer (not next door but perhaps 15 minutes away rather than a 7-hour drive). We won’t be moving in down the street from them, we’re not going to be those people, but I can certainly see moving states to see them weekly rather than every other month.

They’re your kids. Do as you want to them, except traffic them.
It is freakin’ expensive around here to rent or to buy, or wherever my older son wants to live (here or near the beach) with a positive correlation/causation of area safety to rental cost.

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I have thought about this a great deal

While owning physical real estate is an investment opportunity, a primary residency is not a great financial investment

There are very few rental opportunities for large single family homes in wealthy suburban areas, so you are basically left with no choice but to purchase. The property tax drag and home insurance costs over time, transaction costs, and ongoing maintenance (roofing, large appliances, furnace, etc) also make it difficult to come out ahead

The easiest way to turn real estate into a prosperous investment is to turn it into a rental

There are very few people who make it big by selling their primary residence. You can only unlock that capital by moving somewhere less “desirable”, which most people are unwilling to do or simply too lazy

Anyways, I guess my point is homeownership is not a great investment unless you happen to live somewhere that glows up like parts surrounding Silicon Valley. Buy as little of a house as you can comfortably live with and invest the rest in something with a lower associated expense (low fee mutual funds and ETFs)

Maybe. It really depends on your goal, though, right? Maximize savings and retire as early as possible? Sure.

I think the point it’s that you can also think about it as another source of assets for retirement, if you plan on a downsize. It’s inefficient, but not awful.


Not the worst unless you take out a mortgage, then it becomes a concentrated leveraged investment. Most people wouldn’t make a decades long leveraged bet on an investment in a single stock or commodity

Banks want you to think that it’s an investment but really it is just another expense. To me a primary residency is less of an investment and more of a tool (keeps me warm when it’s cold out and cool when it’s hot out).

My house was purchased in full in cash. The expenses associated with homeownership are very high even without a mortgage payment. I think after 30 years the property appreciation might help just barely me offset my property tax, insurance, and maintenance cost over that timeframe

The physical house is a depreciating asset, the land on which it is built is where the real growth opportunity lies. For a primary residency you can’t have one without the other. For most Americans, homeownership does not become a financial windfall. It may feel like it when they have sold for more than they purchased for, but once mortgage interest, property taxes, sales taxes, fees, etc are accounted for there really isn’t much juice from all that squeezing


mark it zero bro


IFYP . . . I bought my house during that bubble. I’m almost at a point where my equity = outstanding balance.

Seeing how the current market is going, I’m fearing another “bubble” to burst about the time I’m going to want to sell and down-size.

But I think I’ll still come out ahead even so; but I know of several people who lost money when they had to sell during that 2008 bubble bursting because the decrease in their market value ate up their equity. (My dad had to wait another 2 years before he could sell his house to recover most of that lost equity and retire.)


Bad time to buy during the bubble, bad time to sell after it popped?

By that’s a good point about the downsize… if you are planning on using your equity, you give yourself some timing risk. I was thinking of it from the perspective of “i am not planning oh this, but it might get me to the retirement goal a few years earlier.” But those are really the same thing.

Owning a home is a luxury, so i agree with most of what BBB said, but we also generally earn enough to afford this luxury with some amount of excess that could provide another lever in the broader picture.


Good clarification. I agree totally.

Still in my starter home, which is smaller than most folks’ “downsized” home after the kids leave. With a third adult in the house, it’s cramped. We have discussed moving but with the market the way it is we have decided to fix it up. Might eventually add a sunroom which would give us a little extra space. That or a shed/man cave in the back but idk how we would get heat & air back there nor if it would be approved by the city on our tiny lot.

We have an insulated shed with electric, and a space heater. We haven’t added a window A/C unit but I could see doing that. Zoning could indeed be an issue.

It does not seem like a fun time to be considering a housing upgrade.

On the other hand, the current Zillow value of my starter home is near enough what i paid inflated at 3% per year. Interest rates are near enough the same as they were then, and that was well ahead of the bubble.

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The value of our current home is not the issue. The value of a larger home that costs a lot more than our current home is the issue. We can save by purchasing an older home, but we run the risk of buying someone else’s problems. An alternative is to stay and fix the problems we know we have. Given the very low amount of $ we have spent on this house in 30+ years, it’s time.