A house should be an investment in the sense that it is a vehicle to build equity. The whole point of paying a mortgage for 30 years is so when you retire, you own your house free and clear and don't have a house payment. Which means you can retire on a comparatively smaller nest egg.
Now if you want to say that you should buy a house betting on significant capital gains over inflation, that's foolish.
A house is more than just an investment, though. It's, you know, the place you live. The catchment area for the schools your kids go to. The hospitals you have access to. And so on.
Yeah I don't personally see houses as investments, myself. We bought the house to live in, although I don't know if this house will last us for 30+ years (we've done a pretty good job filling it up already and we don't even have kids yet). So it would be nice if it at least kept its value for when we do end up selling it.
It's kind of a joke or a proverb I guess since both houses and funds are investments with a certain risk but houses also double as a place where you and your family can live ;-)
A lot of people in America use the word “investment” to mean something more holistic than just “financial investment”. A house is commonly referred to as:
- An investment into the future (guaranteed housing, assuming they can pay the bills)
- An investment for their children (safe neighborhoods, good schools, etc)
- An investment into the community (homeowners tend to stay in their house for much longer, and are more interested in participating in community politics as a result)
You seem to be fixated on houses as a financial investment. They aren’t a great investment, you’re right. But you also can’t keep yourself warm and children sheltered with a million dollars in stocks.
Is a home an investment though? You would plan to live in it and probably retire in it. And even if you sold it eventually you would have to spread the profit (assuming appreciation) over the many years that you have lived in it.
- Massive tax subsidies provided by the government. Seriously apalling if you think about it hard enough, but since they're available, you should try to take advantage of them.
Housing is a good investment because it is a place you live in. When you own (and live in) a house, you ideally make both a short-term profit (by having a place to live) and a long-term one (from reselling it later). These aren't mutually exclusive.
My family lives in a relatively modest house in mid sized city. A thought that went through my mind when considering the house as an "investment" is that it's a portion of our overall investment portfolio, and it functions as a hedge against a rise in the cost of housing. It's an assurance that except under extreme circumstances, we can always afford a place to live without massive disruption to our lives.
I.d argue it is confusing long and short term investments. If you will live in the same place for at least 40 years a house is a great investment because you live there rent free after it is paid off. This only works if you pay it off, and continue to live there.
For a large number of Americans, their house is a MASSIVE portion of their total wealth. They likely plan to leverage that into retirement (sell and downsize/move out of the city) and/or leave it to their heirs.
Should housing be viewed as an investment in this way? Possibly not, but between various tax incentives and restrictions on supply, that's what we've decided we want (as a society, for better or worse).
Why would you think that? A well built house can last hundreds of years. Why should it not be an investment?
It makes absolutely no sense to put any kind of money into something that one day will be worthless - like I read that it happens in Japan that on average a house is worthless after about 40 years.
An incredibly good investment for anyone that can afford it in the USA is a house. The government subsidizes your mortgage by fixing the rate. As inflation increases rents, you pay the same amount. It’s an amazing handout for even the slightly wealthy.
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