There is discussion about whether or not a primary residence qualifies as an investment. Some are saying that it is not.
I believe that a home owner's primary residence is, indeed, an investment. Of course, since I sell real estate in Maryland and Northern Virginia, my experience may not match those of agents in other parts of the country. We don't really suffer the serious down turns in the market than do some areas. That said, even in slower appreciating araas, unless someone still lives at home in their parent's spare bedroom, they have the choice of either renting or making a mortgage payment. One doesn't have to make an investment to rent, merely a security deposit which is returned at the end of the lease term. However, when buying a primary residence, one makes a cash down payment, either by actual cash or higher interest rate or second trust. The down payment is their investment and the return on that investment is the proceeds of the sale, when they do sell.
A real estate investment in a primary residence is a highly leveraged investment, especially when purchasing new to-be-built construction, but it is, IMO, an investment. Further, investment in a home surely has tax advantages not realized by renters. Finally, the gain realized at time of sale is taxable unless it qualifies for certain capital gains exclusions.
If residential real estate were not an investment, buyers without children in public schools wouldn't buy in highly ranked school districts. They do so and pay a premium because they know that homes in highly ranked school districts are "a good investment". Do all primary residential real estate owners have a gain when they sell?? No, but neither do all folks who "invest" in the stock market. With the exception of certain markets where investors can buy on margin, there is no place where the investor can leverage a modest out of pocket investment into the types of gains that can be enjoyed by long term residential real estate, the primary resident.
Congress makes tax laws to benefit certain groups of Americans and one of the tax laws that has benefited home owners for many years is the mortgage interest deduction. The investment made by folks who own residential real estate is good for home owners, builders, building materials suppliers, mortgage lenders, furniture manufacturers and sellers and, of course, the real estate industry. One investor, residential home buyers, benefits many other investors, fuels our economy and contributes to the overall economy of America. You bet residential real estate is an investment.
I sold the home in Reston Virginia below in 1998 for $664,587. The market for this home today is approximately $1,400,000. Seems like a VERY good investment to me.
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