Is Your Home Really an Investment?

As a real estate agent myself, looking at this from an us-versus-them point of view would effectively render it a rather threatening question to the livelihood of a typical estate agent, but then again I’m not a typical real estate agent, am I? I strongly believe that one should be happy with the opportunity they have to earn money in an honest way and as far as honesty goes in this particular industry, there is no need for the lie of your home being an investment being perpetuated further.

Your home is only an investment insofar as you turn it into one, but it’s certainly not an investment in the traditional sense of what an investment is defined to be. Sure, when you take money out of your pocket and buy something, no matter how big or small it is, technically you can be said to be investing in something.

From the point of view of an economist or perhaps even a financial advisor whose salary depends on them giving accurate advice, these qualified individuals would refer to an investment as something you put money into with the hope of getting back returns, typically in the form of profits. Now, unless you’re going to AirBnB it or rent out portions of it under long-term leases, does a home you purchase bring in money?

It’s more of a liability

If anything, as a homeowner the house you bought is a liability. Yes it’s probably the biggest purchase you’ll ever make to represent the biggest financial commitment you’ll probably ever make (mortgage bonds go up to 30 years these days), but don’t let anyone ever fool you into believing that it’s an investment. It’s not.

The property you call your home is going to cost you money for its upkeep, something which is true even in the case that you might be living in a country where there are no property taxes to pay (municipal rates and taxes). There are basic operational costs involved, such as maintaining the property (cleaning the house and the yard), powering up the property and ensuring the supply of clean water to go along with the sewage disposal system. In case you didn’t know, it costs money for all of these things which admittedly are just part of any property.

Maintenance goes beyond the cleaning of the property however, with something called planned obsolescence no longer making for a controversial topic. Things just aren’t built like they used to be and so you’ll find yourself changing light-bulbs more regularly than what your grandparents surely did, so too just having to make some structural replacements, patch-jobs and upgrades to various elements forming part of your home.

Everyone does indeed need shelter however, so this is not to say that you must not ever consider buying a home. All that this is, is a reality check as to what a house really is and it’s not an investment as is widely made out to be.

Appreciation value doesn’t mean anything either if you’re planning to live at your home for the rest of your life.