Your Home is NOT an Investment

Real Estate Agent with Long and Foster REALTORS®, Gainesville, VA VA License # 0225089470

Your Home is NOT an Investment

Somehow, during the real estate boom, the prevailing thought in society became that your home was an investment.  It kept appreciating and you could draw equity from it for other things.  Or, you could flip it in two years and go by an even higher priced home with the money you made off of the sale of the former.

Here's a news flash.  Your home is NOT an investment.  Here's why:

Your home is not easily liquid, as investments should be.  When you need to cash it out, you need to find a buyer for it and also need to find another place to live, which can be costly.  When you sell stock, you just sell it and get the money.  No moving necessary.

Your home is serving a purpose.  The reason you bought it is to have a roof over your head.  Yeah, in the long run, you will build equity in it, but again, it's meeting a primary need, SHELTER.  Even if you live in the home for thirty years, by the time you sell it, you will need to find another place in which to live, which will likely eat up that equity. 

Buying a home is still a sound financial and life decision.  You lock in your housing payment and the place you will call home.  You get a mortgage interest deduction on your taxes.  Rent can't do that.   And you know rental rates only increase over time.

It's a nice benefit to build equity over the years in a home, but let's not lose sight of what you are buying when you buy property.  You are buying a place to live.  Yeah, it's the largest purchase you will ever make.  But if you have ever leased a home, and seen the annual total on your rent, you know that no matter where you live, housing will always be your largest expense.  Might as well lock in the payment and have a place to call your own.  Just remember, it's not a blue chip stock that is going to wildly appreciate and put you on easy street.


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John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

Amen!  Great post and sound advice.

Feb 05, 2012 06:05 AM #1
Mark Delgado
houses for rent, Solano County & Glen Cove - Benicia, CA
Benicia and Vallejo, Property Management, rental h

Very true.  In fact, by managing the mortgage with your advice in mind, our family is in good shape right now as opposed to many less fortunate folks that managed their mortgages as if the homes were investments.

Feb 05, 2012 06:11 AM #2
Peggy Hughes/pha logistix, inc.
pha logistix inc - San Francisco, CA

Very good advice for the young, first time buyers out there, as well as some older folks who didn't totally think through their refinancing options a few years ago and are now underwater.. thanks Chris Ann.

Feb 05, 2012 06:12 AM #3
Gwynn Carpenter
Gwynn Teal Carpenter-Broker: Home and Hearth Realty (Austin) - Austin, TX
: Broker, Home & Hearth Realty (512)467-6191

Chris Ann: This seems to be the theme that is now being spread - Your Home isn't an Investment!  I heard this not too long ago (somewhere) but you have so eloquently put it in everyday terms.  Your home is your SHELTER!

Feb 05, 2012 06:18 AM #4
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

The new realization for many new homeowners. . and its our job to bring this message in unison. . 

 Have a great Super Bowl weekend!

Feb 05, 2012 06:18 AM #5
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Chris Ann - That's a very clear and useful point about "homes". While real estate can be a great investment, the home you live in is better viewed as you describe.

Featured in BananaTude!!


Feb 05, 2012 06:29 AM #6
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

John:  Thanks.  Glad you liked the post.

Mark:  Times can get tough pretty quck when you start financing unnecessary stuff in to the mortgage like new cars, toys, trips, etc.

Peggy:  In our leases in Northern Virginia we have to give the annual outlay in lease payments.  It's sickening to see that money going toward no security in housing.

Gwynn:  It's been the advice I've heard all my life, so I never got caught up in the boom thoughts of getting rich off a house.

Fernando:  You too.  Enjoy the weekend.

Dick:  Investment properties are indeed a very different animal, but if you live in it, it's not an investment.

Feb 05, 2012 06:54 AM #7
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Good Afternoon Chris Ann, This is a great blog that was needed, it should also say your home is not an ATM. So many people I talk to who are facing a short sale or foreclosure becuase they bought a second home, a RV, boat. I see some whop refinaced 4 and 5 times in 5 years. Have a great Sunday

Feb 05, 2012 08:38 AM #8
Alan Gross
PrimeLending, A PlainsCapital Company - Bethesda, MD
Loan Consultant

This is something homebuyers need to realize. Especially the points about having nothing after rent is paid and building equity through your mortgage payments. And despite what some people may think, appreciation will return to the housing market in a reasonable manner.

Feb 06, 2012 01:43 AM #9
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Scott:  I think the ATM logic goes hand in hand with those thinking their homes are there to make them piles of cash.

Alan:  Reasonable appreciation will definitely return.  I just don't think many people give thought to the fact that while their asset is appreciating, so are the assets they will want to purchase in it's place when they sell.

Feb 06, 2012 02:27 AM #10
Coral Gundlach
Compass - Arlington, VA
Real Lives. Not Just Real Estate.

Chris Ann 2nd your point in #10 is so spot on...and it's exaclty why we all should buy our retirement home now!  

Feb 06, 2012 11:55 AM #11
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Coral:  I'm not able to look that foar ahead.  No clue where I want to retire. 

Feb 07, 2012 05:43 AM #12
Curtis Van Carter
Better Homes & Gardens Wine Country Group - Yountville, CA
Your Napa Valley Broker Extraordinaire

Chris Ann

Too many of homeowners forget why they bought. The pleasure of being able to do what you what, fell the pride of owning and as you so aptly pointed out not worrying about next's month rent amount.

Good post, cheers cvc

Feb 07, 2012 06:01 AM #13
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Curtis:  I hate the words, "The largest investment you'll ever make."  It really should be, "The most amount of money you will ever spend in your lifetime will be housing.  You might as well own it."

Feb 07, 2012 06:10 AM #14
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Chris Ann Cleland

Associate Broker, Bristow, VA
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