May 6, 2014
A recent article in the Washington Post was hardly favorable to housing. Basically, the article dispels the belief that a home is the best investment for most people. Other investments, such as stocks, are better investments over the long run.
The article misses the point. The home you own isn't an investment. Properly speaking, a home is an asset. It's an asset that satisfies a very basic need -- it provides a place to live. That's not the proper role of an investment, which most people buy for immediate cash flow and to eventually sell at a higher price for a profit.
A home frequently satisfies the latter requirement: Over time, a home usually appreciate in value. We aver that a decade from now most homes across the nation could be sold for more than the purchase price today. In this regard, a home is an appreciating asset, but still not an investment.
A home is only an investment when it is rented to generate monthly cash flow or to be renovated and flipped for a profit. But in this case, a house is not a home. It's only a home to the family occupying it.
We might be parsing semantics here, but words matter, and the Washington Post got the words wrong.