Home as Investment – Bad

Real estate values in recent years have been incredible. Home values have sky rocketed, creating jobs both in blue collar and white collar circles. Does this make it a good investment? Not traditionally, because home values while they have had an upward trend particularly in recent years, over the long haul, they have appreciated at a relatively solid but slow rate, when money for improvements, appliances, and taxes are considered into the equation. 

Homes in recent years have gone from having the solid foundation of own your own home, to being a financial tool. As with any bubble it burst leaving millions under water on mortgages. This sudden deflation of the market for some caused a fleeing from the house, leaving the bank to deal with it. Banks lost millions because the idea of home investment became so central and seemingly necessary that banks made loans on poor credit and/or little or no down payment.

There are still trades going on in major Wall Street financial firms dealing with home loans, but these are discounted  from the idea of buying a home as an investment, concentrating on the micro scale of the single investor rather than the macro level of multi national organizations. Home values can and have fluctuated in the short term, so, if by investing in a home, one mean investing in real estate, it may be said that is a different argument. 

If one were looking into solid investment vehicles, for long term investment rather than quick turn around, Money Market accounts, and savings accounts are about as good as a home, in most circumstances. Roth IRAs, IRAs, mutual funds, 401ks, and strong well researched mutual funds are much stronger ways of building capital, though there is always something to be said about the quick access of savings accounts should there be an emergency. 

Researching investment vehicles, budgeting, and a diversified portfolio are generally accepted as excellent wealth builders, homes as investments can take a great deal of work, constantly needing up grades, repairs and new appliances. As far as a wise purchase goes, there can hardly be enough said. A solid place to come home to, for many people, is an ideal of happiness itself. Every plank of that house comes to be loved. This however does not make it the best investment vehicle.

There are occasions where it may be an unparalleled opportunity. If one were to purchase a for closed home at say, one half the market price, live there for a period, while making the regular improvements, and sell it, if  markets moved at a gradual upward trend, then one has made equity. This however differs greatly from the general idea of buying a home at market value, pouring money into it and hoping the market has turned upward in the period of home use.