How Often Have We Heard This Expression “Owning a Home Is the American Dream”, or similar statements, In a recent survey, 56% of millennials, 59% of Gen X’ers, and 68% of Boomers all identified “owning a Home as the Component to Realize their American Dream”, so chances are you have at least heard this before.
Home ownership may have been created as an industry meme that persists to this day (similar to how diamond industry executives advocated that every marriage proposal spend three months of income on an engagement ring), or perhaps it was simply that our nation built on consumerism anointed the most expensive status symbol as its mission statement.
No matter which school of thought you subscribe to, shouldn’t it be worth questioning its foundation? So let’s open this discussion by debunking some common misperceptions regarding home ownership’s financial advantages and dispelling some myths around them?
“Your Home Is an Investment” No, your home is not an investment – at least not an ideal one. Recent rapid housing price increases seem to indicate we may be entering another housing crisis 2.0 bubble phase, yet even if these prices seem legitimate and continue to climb, inflation adjusted housing price index only doubled since 1890 (not 1980!), an average gain of only 0.788% per year!
What other “investment” would yield an average return of 0.78% and make you say: “Gimme some more of that!?!”?
Note, however, that this return assumes a perfect scenario of no financing costs, no taxes, maintenance expenses and home insurance premiums as well as no other costs whatsoever – none of these elements exist in real life.
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