Why your house is a terrible investment

[Lunican]

Unless you are buying a house with cash, we are basically debating whether it is better to rent the money or the house.

What does everyone think of this point?

It should be subject to the fortunes of one country, one state, one city, one town...No! One neighborhood! Imagine if our investment could somehow tie its owner to the fate of one narrow location. The risk could be enormous! A plant closes. A street gang moves in. A government goes crazy with taxes. An environmental disaster happens nearby. We could have an investment that not only crushes it's owner's net worth, but does so even as they are losing their job and income!

[BridgeTroll]

BT: I rented in 3 vastly different situations before I bought, which ranged from the 33rd floor of the peninsula to a 9' by 10' room in a small house in Avondale.  My mortgage is slightly more than what I paid at the peninsula (actual principal and interest is $55 less per month). I will say that I bought more house than I needed, which is tough. However, I have enough space for a wife and child, when those come along. The freedom, privacy, and pride in having my own little slice of the planet definitely offset the added expense.

I can really argue both ways. It was great to pay so little last year and be able to save. This year i have been able to indulge in more hobbies and explore my creativity and build self reliance with my house (i never repaired anything i rented). If you buy or rent within your means, it's really a matter of personal preference. 

It really is... I think age and stability play into the choice also.  When I was younger I was MUCH more mobile... renting was really the only way.  Not sure if it is tied to maturity or not but stability became more of a priority than mobility.  The very thought of being responsible for the upkeep of the property you own became more of an enticement.  The idea of paying "rent" money to pay off the loan taken to buy the house seemed better than lining someone else's pocket... who clearly did not care about the property except to cash your check.  Like you I enjoyed yard work, gardening, having a dog and a place for the child to play safely.  But I was always quite clear with myself that I had bought a home... not an investment.   

[duvaldude08]

While it may not be "on your mind," it seems like it is an investment in "peace of mind." Plus own it long enough, you will get a monetary return of some sort. With rent, you get a hole in your pocket (and I have no problem with people renting.)

a HUGE hole. WIth my rent being 720 and going up every year, I was getting depressed. My annual raise at work was being ate up because of my renting increasing. Im glad thats over. LOL

[Tacachale]

Unless you are buying a house with cash, we are basically debating whether it is better to rent the money or the house.

Not really. We're debating renting the money or the house with the entire series of benefits and downsides of either option.

What does everyone think of this point?

It should be subject to the fortunes of one country, one state, one city, one town...No! One neighborhood! Imagine if our investment could somehow tie its owner to the fate of one narrow location. The risk could be enormous! A plant closes. A street gang moves in. A government goes crazy with taxes. An environmental disaster happens nearby. We could have an investment that not only crushes it's owner's net worth, but does so even as they are losing their job and income!

Like the rest of the article it's only really meaningful if you're considering buying a home only as a financial investment.

[ProjectMaximus]

Sounds like the author has some investment properties and wants to make sure he maintains a steady flow of renters...

[Lunican]

But even in this thread people claim that rent is throwing money into a hole and lining someone else's pockets. I think the author is trying to dispute the notion that buying a house is any better.

[BridgeTroll]

But even in this thread people claim that rent is throwing money into a hole and lining someone else's pockets. I think the author is trying to dispute the notion that buying a house is any better.

I understand what he is trying to do.  I do not think he did a very good job of it.

[Tacachale]

^Yeah, he's being as reductionist as the (hypothetical) people he's criticizing who think buying a home is always a good investment. Whatever good points he's making he's ignoring literally every other factor in any decision on where to live besides it being a financial investment. Of course here we are talking about it, so obviously he's doing something right.

[Captain Zissou]

It's like those that argue the skyway doesn't pay for itself. Sure. You're right, but it has other benefits not captured by that narrow barometer of success. Roads (apartments in this case), on the other hand make you no returns and fail to provide many of the ancillary benefits as well.

Yeah..... I took it there.

[fsquid]

let me know when I can deduct part of my rent from my taxes

[ProjectMaximus]

^if you work from home 

[fsquid]

^if you work from home 

guaranteed audit if you take that credit/deduction.

[finehoe]

It might be, but it sure beats living in an apartment with neighbors above, below, and beside you.

As a gardner, the owner of a huge dog, & someone who loves working in the yard; I have really enjoyed the freedom and the space afforded to me by my house.

You can own a place with neighbors above, below, and beside you, just as you can rent a place with a yard with room to garden and for pets.

Let's not confuse the characteristics of a property with mortgage vs. rent.

[ProjectMaximus]

^if you work from home 

guaranteed audit if you take that credit/deduction.

not really, but i get your point. it's simply a risk that you'd rather not deal with.

[finehoe]

let me know when I can deduct part of my rent from my taxes

When I lived in the District of Columbia, you could deduct part of your rent from your DC income tax because it was assumed that a portion of your rent went to pay the landlord's property taxes, and you the renter shouldn't be responsible for that.