Can Your House Be an Investment and a Home?

by Jason Unger

When we bought our house back in May, we had a number of reasons pushing us toward the purchase.

The biggest reason? Our daughter, born in February, was ready to move out of our bedroom and into her own. But in our two-bedroom apartment, the second bedroom was my office — which I used full-time for work.

We were running out of space, and couldn’t last for much longer with what we had.

But there were also a number of financial incentives for buying when we did:

  • The house was more than 27% cheaper than its last price, 2 years ago
  • Interest rates were ridiculously low, giving us a 30-year fixed at 4.875%
  • We could get the first-time homebuyer tax credit of $8,000

So, it made financial sense — as well as family sense — to buy.

But if there’s anything we’ve learned from the ridiculous housing bubble of the past few years, it’s that buying a house in order to make money is not a good idea.

Is it a House or a Home?

Considering that nearly one-third of homeowners are underwater on their mortgages (they owe more than the house is worth), treating your home as an investment is a losing proposition.

Even worse is the idea to take money out of your home and use it to “invest” in upgrades, assuming it will pay off in appreciation.

Most financial planners are now suggesting that homeowners not treat the homes they live in as both a home and an investment, according to the New York Times.

A good first step, said Elizabeth Ruch, a financial planner at the asset management firm Waddell & Reed in San Diego, is to look at that brick, stucco or wood dwelling whose walls surround you and “determine whether it’s a house or a home.” Explaining the difference, she said: “A house turns into an asset for you. A home is where you’re going to live and possibly see out your days.”

It is best not to confuse the two, she and other financial planners say. Using a home as a house ? an investment ? involves taking a risk with something that the owner cannot afford to lose.

Why I Can’t Watch ‘My House is Worth What?’

My wife and I have watched a lot of HGTV, especially in the past year or two as we’ve thought about homeownership.

Easily, the worst show on that channel is My House is Worth What?, where homeowners get a real estate agent to assess their home’s value. While this doesn’t sound ridiculous at first, invariably the homeowners are doing it for one reason: to determine whether or not to continue to upgrade the house.

They aren’t doing the upgrades for themselves, because they want the new appliances or the upgraded kitchen or bathroom. It’s solely to see if they are making a buck.

They’re treating their house as an investment — not as a home.

The real estate agents add fuel to the fire by telling the homeowners that they’re guaranteed to get a return on some upgrades, often saying they’ll get a 100% return on investment.

While I won’t go as far as to say this show and HGTV are responsible for the housing bubble, others certainly will.

Writing in the Wall Street Journal, Jim Sollisch, creative director at Marcus Thomas LLC, says that “HGTV pumped up the housing bubble by parading the most mediocre, unworthy-looking homeowners into our living rooms to watch while they put their tacky, run-of-the-mill tract homes on the market for twice what they paid and then went out and bought houses with price tags too obscene to repeat.”

Time magazine, in its 25 People to Blame for the Financial Crisis, included Burton Jablin, programming czar at Scripps Networks, which owns HGTV. He “helped inflate the real estate bubble by teaching viewers how to extract value from their homes. Programs like Designed to Sell, House Hunters and My House Is Worth What? developed loyal audiences, giving the housing game glamour and gusto.”


Too many people have been hurt because of the housing bubble. And while HGTV is obviously not solely to blame, you’d be hard-pressed to disagree that they didn’t have some effect.

What do you think: can a house be both an investment and a home?

Let me know in a comment below.

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