A Home Is a Lousy Investment

Question

Interesting article in this week's WSJ: A home is a lousy investment (doubt many are homeowners here) but nevertheless... https://online.wsj.com/article/SB1000142 ... re_twitter

nosferatudracon · Answer

Very interesting article bb.

Hammbo · Answer

Interesting little article, but keep in mind that this comparison really only holds up if you are buying a  second  home, imo. If you're buying your primary residence, then there is no comparison, as you will stop having to pay rent, and that translates to a huge analogous gain. The article states, What isn't stated is that the same dollar, spent on renting your apartment in 1980 is worth $0 in 2007 and 2010, and wasn't available to be put into the Dow anyway.

Just wanted to point this out because I've seen other discussions where people don't realize that a primary residence is still a great 'investment', compared to renting!

segfault · Answer

Interesting observation by my co-worker:
there's a securitized form of almost all investments.

If you're staying at a place medium term or longer, renting can be compared apples to apples with buying.
The amount of rent is equivalent to a mortgage (plus taxes, association fees, maint., etc) on a depreciating property. The portion of your payment that would have counted toward equity is paid to the landlord instead. (Same point Hammbo made.) This comparison assumes a low down payment but with FHA and even conventional mortgages today, down payments can be very low (<5%).

I've seen some sites index the cost of buying vs cost of renting by city/region. The devil is probably in this detail.

A Home Is a Lousy Investment

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