Housing Investment Debate
This cluster centers on debates about whether buying a home or real estate is a good financial investment, comparing it to stocks, crypto, or renting, while discussing leverage, appreciation, opportunity costs, and the distinction between primary residences and rental properties.
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People are going to downvote you for mentioning cryptocurrencies, but your point is true even of much more conservative investment strategies. A home is not an investment, it is a depreciating asset. If you can afford to buy a home (in cash or on a mortgage), you will almost always come out ahead if you put the money into mutual funds and rent instead.
They're only an investment if you buy more housing than you need. After all, you need housing, so when you sell that home at increased value, you will need to use that revenue to buy new housing which has also risen in cost.In short, only if you can sell your home and buy a cheaper home can it be considered an investment. Otherwise it's just non-liquid capital.
why would anyone choose to invest in something that could potentially incur losses It's a house. They'd LIVE IN IT, or they'd rent it out.
Why wouldn't they just buy the new houses as investments ?
Any safe housing is a good investment. It is the bottom of the hierarchy of needs. While you might not make a profit on the property, you should at least come out even when selling. It provides a way to save money (to eventually own the home) and you can use that money to slowly climb into another better house and so on.
What you are missing is that a home purchase is typically leveraged. You buy the house for 100K and put 20K down. The house increases to 125K and you more than doubled your money. Now take out those fees and etc. Problem is you still need a place to live and those houses have gone up in value too, so you need all of that profit for the new down payment.Not saying this makes houses good investments, but it is something to consider. I think that this is the cheapest leverage a typically pers
I am sorry the house you buy that you live in is not an investment it is a liability.Real estate is only an investment, and a very good one, when you are buying property that you then rent out. Then the leverage helps you out as long as you have renters and rents go up or stay the same. The price of the home matters far less in that case until you are ready to trade up.I am sure at this level though inverters are having a much harder time finding real estate that is cash flow positive.
This completely depends on the "modest appreciation". Even though it seems like it, growth in housing is not a given in the way you can reasonably assume stock market appreciation over the long term. Plus there is a lot more uncertainty since you cannot hedge your investment in a home. The entire market could be doing great but your particular house may be affected by local zoning laws or a homeless shelter in the neighborhood or a new highway or anything else.
You're neglecting to mention opportunity cost. That money could've been invested in stocks, crypto, etc. and you would've made out a lot better (and avoided the headaches that come with owning property)
How is a house an investment at all?