Your Home Is NOT A Good Investment
Recently I watched a short video interview of Nobel prize-winning Yale economist Robert Shiller. He has owned his own home for over 32 years and stated that after adjusting for inflation he doesn’t think the value of his own home has increased at all.
He went on to say that a home is only a good investment if you are a professional and really know what you’re doing. But for the average homeowner, your home is really not that great of an investment.
I’m sure I just ticked off every real estate agent in the country. But…
I tend to agree with Mr. Schiller. If you’ve owned a home for a long time you no doubt remember what you paid for it and you have an idea of what it’s worth today. It’s just human nature to think that the increased value is the profits that our home has generated for us.
However, the flaw in this thinking is, we all, myself included, tend to forget about all the money we spend on our homes while we own them. Maintenance and repairs. Taxes and insurance plus the interest payments if you have a mortgage. Once you add all these expenses in to the original cost of your home and factor in inflation I think for most of us our homes really aren’t that great of an investment.
Now I’m not suggesting you NOT buy a home, because a home is also a lifestyle choice. So when it comes to owning a home, what I am suggesting is that you place more emphasis on your lifestyle and whether or not homeownership fits your lifestyle and not think of it as an investment. Certainly not an investment that will generate income for you during retirement.