Illustration by Muti
Before 2008 it was not uncommon for homeowners to see their houses as investments—things to purchase in hopes of generating a profit. But “you have to be careful going into home ownership” that way, says Ken Parchman, president of the Cincinnati Area Board of Realtors. “Medium-term, long-term, a home is still an excellent investment.” But short-term? Not so much.
The fact remains that buying a home is “the biggest financial transaction” most families will ever make, says David Gunn, head of the mortgage department at Fifth Third Bank, so thinking of a house more as an asset than an investment is probably a better way to go. If anything, Gunn notes, a home is really “a forced savings account, because you’re building equity in it as you make your payments.”
But as the housing crash of 2008 showed, that equity isn’t always secure, especially if you need to sell before you have built up enough of it, or you overpaid for your house when the market was up. So the lesson is: “You shouldn’t be buying a home as an investment because you want to make x amount of money,” Gunn says.
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