Homes, Piracy, Treasure
Is your home an investment? And a reading recommendation.
I've caused consternation for more than a decade by pointing out that your home probably isn't an excellent investment. Homeowners hate it because: too late! Folks who don't own homes yet hate it because they now wonder why they were saving their down payment.
I'm not saying that you shouldn't own a home. I'm just trying to inject some reality: most folks don't sell their home and rent an apartment. No, they typically buy a more expensive home.
You don't get rich buying Apple stock, selling it, and then using the proceeds to repurchase Apple stock. Also, holding Apple stock costs nothing -- because Apple pays a dividend, you can earn money. Owning a home costs insurance, repairs, and property taxes, among other things. You can make money selling your house; it's just not an automatic thing.
That's fine; there is nothing wrong with owning your home. You have to pay to live somewhere. Just keep in mind that you will still have to live somewhere when you retire.
Also, remember that homes aren't necessarily liquid. If you live in the San Francisco Bay Area*, you might not know that sometimes houses take more than twelve attoseconds to sell. If you lived through 2008 and 2009, you might remember that some homes took years to sell -- and usually for less** than their asking prices.
So, if you're using homeownership to justify not investing in low-cost index funds, think twice!
Yar! Speaking of Pirates...
If you need a good yarn, I highly recommend Pirate Hunters by Robert Kurson. It's a true story following a modern-day search for pirate treasure, and I promise you'll learn some splendid 18th-century pirate insults along the way: "Eat what falls from my tail!"
It's a vivid read. Imagine this scene:
"...the onrushing ship lowers its English flag and hoists a new one, bloodred and emblazoned with an hourglass. This is a pirate flag. The hourglass makes a warning—if you resist, your remaining time on earth will be short. And bloody."
*Folks living in the SFBA may not have heard that other bays have been discovered. ;)
**In my experience, usually homes sell for less than the asking price. How much longer can the housing shortage in the SFBA continue?