Home Ownership is Not an Investment

I have had about enough of the touchy feely articles and blogs talking about all the wonderful aspects with the investment of home ownership. First of all, owning a home is not an investment, it’s should be about being your home. When someone spends thirty thousand dollars on a pool for their home, they should not expect a thirty thousand dollar increase in the value of their home.  The twenty-five thousand dollar kitchen remodel does not equate to an increase of equal value, but there are homeowners who still feel, when they attempt to sell their homes, the professional realtor is not being fair to their cause. What the majority of homeowners do not realize, their home is not any more valuable than the average home in their neighborhood, just more marketable. The wonderful program called, FHA 203K, promises easy home ownership with as little as 3.5% down.  What isn’t apparent, is the long term cost of buying their home.  What most first time home buyers or uneducated buyers do not take into effect is the principle and interest cost, insurance, taxes, primary mortgage insurance, maintenance and the cost to sell their home; is home ownership an investment?  The answer is no, your home is not an investment, it’s your home.  If I were to equate home ownership to buying a car, many would say there is not a comparison, and I would remind them, it is exactly the same.  What is the difference between a forty-thousand dollar car and a twenty-thousand car on a 200 mile road trip?  If they leave at the same time and travel the same speed and arrive at the same time; what would be the difference?  Many would proclaim a difference in comfort or the safety issue, but I proclaim your car is about transportation and your home is about where you live and either equate to status.  If you really want homeownership to be an investment, buy a duplex or a quad and gain enough cash flow to pay all expenses and put cash in your pocket every month or buy a fixer-upper well below market value, remodel it and sell it a year later for a profit, (all while living in a construction zone for a year).   

I recently was on a listing appointment for a customer who had a beautiful mobile home that had better features than most homes.  Solid wood cabinets, immaculately kept and decorated, sun room, pool, fenced yard, tiki-bar, workshop and a carport-garage with a paved driveway.  When I advised them of what the value of their home was, the homeowner was offended by what I recommended the list price to be.  They reminded me that the sun room and carport-garage cost that much as I proposed to list their home for and they would not hear of what I had proposed to list the property for.  They had made the biggest mistake of home ownership, they expected an equal dollar of return from their “thoughts of investment” into their mobile home which depreciates in value versus appreciates, (regardless of how nice it is) and there were frame built homes within a mile of their home selling for less than they would accept as a sales price.

 Home ownership can be a solid, modest investment, with the right planning. So go ahead, put in #4 granite tops over solid cherry cabinets, install real bamboo floors and that eighteen point body sprayers in your shower but do not expect to get your money back.  Make your home, your home and go ahead and put those fancy rims and tires on your car… they are not investments, they are for your pleasure and enjoyment.