Buying A House? Is it an Investment or a Home?

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Have you ever asked yourself what are you paying for when you buy a house?  Often times when people bicker about renting or buying a home the key issues is that home values increase over time.  Obviously, that assumes that your home is an investment.

This article is the third part of a four part series for home buyers.  I’ll be doing on some topics related to home ownership.  Here’s what is upcoming over the next few weeks:

  1. Pay Off the Mortgage Sooner or Invest:  A Look At The Math
  2. First Home Buyer Info | How To Know If You’re Ready to Buy
  3. How To Pay Off the Mortgage Early

However, I think there are substantial differences between what defines a home and what defines an investment.

A home is a place of safety, security, and comfort.  It is a place where smiles abound and a memories are made.  Home, is where the heart doth dwell.

An investment is a place where money is given the opportunity to appreciate.  It is a place where risk is involved and profits are both made and lost.  An investments, is where the dollar doth dwell.

Thus I think it is hard to own both a home and in investment. 

When The Home Is Just A Home

I love my house.  It is now about three years old but it already has the scratches on the wall by the fridge where my son decide he was going to draw on the wall with daddy’s keys.  It has the overgrown garden where we attempted to grow a garden ($50 worth of seeds and products and only 3 cucumbers).  It has the warped door from where we had the leak. 

That is our home and we love it.

It provides a place for us to lay our heads.  Provides the shelter we need.  It keeps us safe. 

Our home is a home.

Can A House Be A Home and An Investment?

When home prices started dropping a few years ago people started acting like a basket of moneys.  Everyone was shocked, they were concerned, they were threatened.  Now, let me offer a big fat disclaimer, I was not living in North America when house prices started to drop and in fact our house value has continued to increase. 

However, isn’t your home still your home no matter its value?

Does the insulation let in more cold when the house is worth $50,000 less than you paid for it?  Does the carpet feel less soft now that the value has decreased?  Do you kids have trouble sleeping because the housing market is in a slump?

So why do we worry?

Because we make the mistake to buy an investment instead of a home. 

A home is a home regardless of what the market does. 

When I paid for my home I was not buying potential.  I was not buying for what could have been.  I was buying a comfortable and safe place of residence.  I am still getting that for every dollar I spend regardless of the house value (measured externally).  In fact, my house value (measured internally) has increased.  We’ve grown attached to our home.  It is more special to us now.  The home is more of a home. 

Dangers When You Try To Buy An Investment Not A House

When you want to invest you are more likely to move to a neighborhood that doesn’t personally suit you as well, just because it presents a great possibility for a return.

When you want to invest you are more likely to borrow extra money (because you’ll get more return) and as a result you might jeopardize the peace you enjoy within the home. 

When you want to invest in a home you are more likely to be concerned about market drops and increases.  When the market is hot you might think about moving the family just to take advantage of the market. 

If you house value increases – great.  That is icing on the cake.  If it decreases – what does it matter?  You got the home at the time you needed a home.

Is your house choice influenced by investing?  How much of the house decision should be an investing choice and how much of it should be a personal comfort choice?


  1. says

    I am totally with you. We have the same attitude about the home in which we live. Our house also has crooked walls and doors. It has been around for 150 years. Our family is very happy there and we don’t care how much it is worth. At the same time, we view our home as a long-term piggy bank which we explain in this guest post When we pay off our mortgage, we will have accumulated a bit of savings/equity in it.

    • says

      It is always good when minds agree :).
      I love how your family happiness is all that matters. Thanks for passing along your guest post.

  2. says

    True points. We bought our house as a home. It’s an investment, because it’s value keeps increasing. But that wasn’t even a thought. We noticed that with taxes and when we started calculating our net worth. Some people include a house in net worth, some people don’t.

  3. says

    Of course a home is just a home; that is the most important thing. Investment is secondary; nominal increases don’t mean much if everything else is also going up in price. You can always speculate on an area that you think is up and coming, but then this is speculating, not investing.

    Real-estate property, on the other hand, IS an investment. It throws off cash income, or at the very least your tenants will pay your mortgage for you. That isn’t so bad, either :)

  4. says

    Yep, I meant to write “rental” property so as not to conflate it with self-home ownership :)

    Although, I think that leveraging your own home is OK so long as you do not put yourself in a negative equity situation nor put yourself at risk of one (i.e. market prices drop by 20%).

  5. says

    When I shop to buy a house for myself, I always think about the resell value (I am careful bout things that annoy regular people such as highways in front of your house).

    However, your personal home should never be considered as an investment. If you consider all the money you engulf in interest, taxes, maintenance and improvement and the final result when you sell your house; you will notice that you barely beat the inflation (unless you are quite lucky and you buy in 2002 and sell in 2007 ;-) ).

  6. Arthur @ says

    A house should be a place to live. Not an investment where you “hope” to make money someday when/if you sell it. Those days are gone in this market and economy. If you paid cash for a home to rent it out, no debt, then that may be a different story.

  7. Debbie M says

    Actually, you’re still missing a point. If your home is just your home, you don’t want the market value to go up because then your taxes and insurance will go up. (You do still want the value to you personally to go up such as by having better shops open up nearby and having potholes fixed.)

    The only nice bonus about values going up is that if they go up so high that you can no longer afford your taxes and insurance, then you should get a lot of money if you sell.

  8. says

    I think a home is less of an investment, and more a means of preserving wealth. Even if the appreciation on the the home over time doesn’t equal the money you put into it, you have still built up equity so you at least have something to show for all the money you’ve spent. When you rent, that money goes out the window, never to be seen again.

    Once you get the house paid off is where the biggest benefits begin because you have a paid for house that you live in while only paying property taxes, maintenance, and insurance. If you’re a lifetime renter, you still have to meet that rent payment every month and the rent continues to go up year after year. I just wrote a post about this that puts some numbers together that will shock the “my home is an investment” crowd.

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