Comments on: Your Home Is Not An Investment

By: Adam

Adam — Sat, 29 May 2010 02:57:24 +0000

Yeah but your house appreciated based on a fradulent bubble. That is not the norm.

By: R.R.

R.R. — Thu, 10 Sep 2009 04:03:51 +0000

From my perspective, it’s better to keep renting and save the money and in 5-7 years buy the half of mortgage outright. That’s a smart investing. At lease you wouldn’t have to pay the interest that’s twice of what the house is worth.

By: skarrlette

skarrlette — Sun, 30 Aug 2009 20:26:51 +0000

What if you lose your job??? Where are you going to be then? All that money will be down the toilet when the bank takes your house in 3 mos?? You can’t guarantee anything and you have not protection.

By: skarrlette

skarrlette — Sun, 30 Aug 2009 20:15:14 +0000

I am glad to finally see someone busting the myth that you have to buy a home. First off lenders are not doing anyone any favors, a home that costs $300,000.00 at the end of mortgage you have paid almost double that in interest. Wouldn’t the person have been better off saving the money and buying the home outright for cash??? I just don’t get the mindset that everyone in this country has fallen for. Rent a small apartment and bank all your money. Home ownership is set up to benefit the government and banks. What ticks me off if I buy a house then pay my mortgage for 20 yrs and then lose my job and if I can’t make my payments for 2 mos the bank takes my house? The bank doesn’t give me points for paying for 20 yrs and hold off to see if I get my job back. Does the bank give me some of my money back to help out? Where is my safety net? Who protects me from losing all my money? People have to realize banks our out for banks to make a profit, these loans are not set up to benefit the customer. We have to figure out a better way to buy property in this country.

By: Evolution of Wealth

Evolution of Wealth — Wed, 26 Aug 2009 11:11:09 +0000

@David Using the rate of return calculator on CNNMoney.com (what CNN says is accurate not me), I did a starting value of $100,000 then 30 years later it was worth $600,000. That’s your 600%. It give me a rate of return of 6.15% over those 30 years. Your example completely supports this article. Yes you got a good rate of return on the outside but what other money did you put in. You need to account for taxes, insurance, maintenance, inflation, etc.
Jim should say thank you for your help and support.

By: David Brusiee

David Brusiee — Wed, 26 Aug 2009 03:09:38 +0000

Of course all bets are off if you are talking CA over the last 30 years. My house appreciated about 800% by 2005 but is now down to about a 600% gain. If this wasn’t a good investment I don’t know what is…

By: Alen

Alen — Wed, 26 Aug 2009 00:57:53 +0000

You’re looking at it all wrong. People buy homes because they can afford to. So naturally, their net worth would be higher. You simply can’t look at those who rent and those who buy. You need to compare at various income levels, for example those who earn between 50-75k/yr or those that make 75-100k per year and then sub-divide those into renters and owners. The article simply makes you aware that home ownership is not necessarily an investment. You’re paying interest at 7%. You’re paying taxes, insurance, etc.. Would you be better off buying a house, buying stock, or investing in something else?

By: g

Tue, 25 Aug 2009 23:54:11 +0000

The average net worth of a person who rents in Canada is $2000, the average net worth of a person who owns their own home is $100,000.

So much for this so called “expert”.

By: Patrick

Patrick — Thu, 20 Aug 2009 20:40:05 +0000

Homes are great to own, but nobody should put all their eggs in one basket and expect that their homes will gain in value and give them a return.

By: MyMeans

MyMeans — Thu, 20 Aug 2009 15:25:52 +0000

I totally agree that homes shouldn’t be the majority of your assets/investments for the majority of Americans. The analogy to stocks is perfect because they both have a risk that you can’t time unless you’re on top of things and constantly watching/researching, which most normal folks aren’t. However, if homes/properties are your full-time job, then it can be profitable (if you’re smart/lucky).

By: Bobster

Bobster — Thu, 20 Aug 2009 14:33:15 +0000

The money you have saved in rent is part of your return. Imagine buying food that never runs out or a car that never needs to be replaced. When I buy a house I provide for my housing needs AND the value of the asset (usually) appreciates.

By: Bobster

Bobster — Thu, 20 Aug 2009 14:30:48 +0000

OK, perhaps I’m fighting an argument that you aren’t actually making. I guess whenever I hear the rent vs buy arguments I get rankled. Buying instead of renting was one of the best financial decisions I ever made. My mortgage was less than the rent I was paying for half the space. Of course, I bought in a buyers market, but here we are again in a buyers market.

By: Evolution of Wealth

Evolution of Wealth — Thu, 20 Aug 2009 03:13:15 +0000

Okay it’s late and there are some bad typos in that. I meant to saying hopefully it generates more than enough income to cover expenses. Then I wanted to say that you are only relying on appreciation. Sorry about that.

By: Evolution of Wealth

Evolution of Wealth — Thu, 20 Aug 2009 03:11:13 +0000

@Bobster
How about on an investment property (for renting) you put at most 20% down. Then your property hopefully to more than cover the expenses (mortgage, taxes, insurance). So it generates income from the beginning and then you get the added bonus of appreciation (if any). When you live in the house, there is no income derived from it. You are really only on appreciation that can only be realized with a banks permission or the sale of the house. As the article points out, it isn’t usually as good a rate of return as you think.

By: Bobster

Bobster — Wed, 19 Aug 2009 16:31:22 +0000

Lot’s of investments aren’t sure things. Heck, if you put more than $250K in an FDIC insured account and the bank went under, you’d lose money. So are we really just talking a matter of odds? Every investment needs to be evaluated before you plop down the cash. I would say that long term, buying a house is almost certainly a good investment.