How to Spend Money Wisely » Real Estate

Should you view your home as an investment?

As my husband and I shopped for a home a few years ago, the real estate agent kept talking about our new home as an investment. My husband was nodding along with him. I, on the other hand, found myself screaming on the inside: “But a home isn’t an investment!”

When many of us make the “rent or buy” choice, the designation of a primary residence as an “investment” comes up. The assumption is that the home will increase in value, providing you with a return that outstrips the price you pay.

I have a hard time viewing a primary residence as an investment. I can see where a rental property is considered an investment, but the home you live in is rarely a true financial investment.

Maintenance costs and home improvements rarely boost the value of your home to an amount that offsets the expense. So, by the time you pay those costs, plus property taxes, plus interest charges, you’ll be hard-pressed to break even if you stay in your home long-term.

And that doesn’t even include a real estate market crash.

Your home as an emotional investment

Instead of thinking that your home will turn into an amazing financial investment, it’s a better idea to think about it as an emotional investment. Figure out how much house you can afford, and try not to go overboard. You don’t want to cause financial problems because you were too interested in the emotional aspects of your home.

Even though I don’t see my home as a financial investment, I do see the emotional benefits attached to it:

  • Make improvements we want: We can do what we want to the house to really make it feel like “ours.” From changing the flooring to putting in landscaping we like, we can truly make the home our own.
  • Security for our son: My son has a secure home that he is familiar with, and that he can come to. That kind of stability is priceless, especially as we build memories as a family.
  • Sense of community: There is a real sense of community when you get to know your neighbours and start to feel as though you belong. You can put down roots in the area, and really be a part of something positive.
  • Help others: We have a place that others can come to. Whether a cousin comes to get away from problems, or a brother lives with us for a couple of months while he gets back on his feet, being able to provide a place of comfort for others is a great feeling.

The sense of peace and contentment that comes from the home, and the returns on our emotional investment, are well worth the price – at least in our case. We made it a point to buy a modest home that meets our needs, and, even though the returns won’t be financial, the emotional benefits have been great.


  1. Howard

    Men buy a house, a woman buys a nest.
    I know what my return is when i buy a Bond or a dividend Stock and if I borrow the money, the interest is Tax deductible.
    I have no idea what a house will be worth in ten years,maybe less maybe more, but in the meantime monies go to furniture,property taxes, decorating, maintenance,bunch of tools and expensive snow blowers,lawn mowers etc.
    A House is not an Investment it is an Expense.
    Mortgage Rates are going up, Property Taxes are going up, there will be more sellers than buyers and the buyers won’t have the monies that the sellers think they should get, so House values have only one way to go, and that is down.
    We sold for a very nice profit,bought in a small town and put a lot of ca$h in the ETF’s that are Bond and dividend Stocks.
    No Debt, monthly income.

  2. BeatingTheIndex

    And I am totally in agreement, unless you’re buying a few houses at a time for speculation, your main residence is not an investment!

  3. Brian

    Because we don’t want to be tied down living in one place, we view our home as an investment. There is good chance that we’ll end up renting it out in the future, so we need to keep that in mind as well. That said, we’re talking about one bedroom condos in a big metropolis, so it’s easier to think about things as an investment. In a rural setting, I might think differently.

  4. Jim Yih

    I think my home is an investment. In fact, if you compare it to my investments over the past 10 years, the house has grown faster than my investments.

    I think everyone’s goal should be to increase their net worth and a home can be a positive contribution to the net worth (especially if you pay off the mortgage).

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