Buying a House Probably Isn’t a Good Investment
Michael Hart | July 12, 2025
Buying a House Probably Isn’t a Good Investment
(But That Doesn’t Mean It’s a Bad Idea)
Let’s be honest—your home feels like the best investment you’ll ever make.
But let's crunch some numbers...
Example:
In 1995, someone buys a home for $200,000. They sell it in 2025 for $600,000. That’s a $400,000 gain… right?
Not so fast. Let’s look at the real math.
Transaction Costs:
Closing costs (5%): –$10,000
Selling costs (6%): –$36,000
Ongoing Costs Over 30 Years:
Property taxes: –$95,000
Homeowners insurance ($1,200/year): –$36,000
Maintenance (1.5% of home value annually): –$190,000
Mortgage interest (6% on a $160k loan): –$185,000
HOA fees: –$10,000
Total Costs:
$562,000
Net Gain from Sale:
$600,000 – $200,000 – $562,000 = –$162,000
Yes, that’s a $162,000 loss. Even though the home tripled in value, the true cost of owning it for 30 years wiped out the gains.
What If You Rented Instead?
Let’s say you rented a home for $1,000/month, with 3% annual rent increases:
After 30 years, you would have paid ~$586,000 in rent.
So yes—renting is expensive, and you don’t build equity.
But the homeowner only came out slightly ahead—and with a lot more risk and responsibility.
What If You Invested Instead?
If you invested that $40,000 down payment at 8% annually, it would grow to ~$402,000 over 30 years. If you also invested the difference between rent and homeownership costs, you could end up with $1 million or more.
So Why Buy a Home?
Because it’s not just a financial decision.
Every summer, I host big backyard BBQs with friends and family. We swim in the pool, eat great food, hang out all day, and roast marshmallows at night while listening to 90s hits. Those memories are priceless.
Homeownership gives you:
Control over your space
Predictable costs once the mortgage is paid
A sense of community and stability
A home base for life’s best moments
A home can be a great life decision—even if it’s not a great investment.
Just don’t confuse the two.
