Is a House Really a Good “Investment”? - by Cullen Roche

The Bottom Line

Don’t worry.  This post isn’t intended to wreck the “american dream”.  None of this analysis means that buying a house is a bad idea.  You have to live somewhere and this analysis does not compare the specifics of renting versus the specifics of buying a house outright, buying a house with a mortgage or using the property as an income source.  The analysis is simply intended to put the total costs and real, real returns in the right perspective for those of us who buy a house with a mortgage and live in that home (as most people do).  In my personal opinion, I view buying a home as a less expensive way to live than the option of renting (but I guess you could make both arguments depending on where you live).  Plus, there are numerous intangibles involved in owning your own home that make it a wise purchase.  But we should stop thinking about housing or talking about it like it’s an amazing “investment”.  Whether you rent or buy you are experiencing an expense.  The real costs of that expense will depend on your specific situation.  But in both real returns and real, real returns (including taxes and fees) the returns are unlikely to be anything to write home about.  And certainly not what I would refer to as a good financial “investment”.