Buying a home is often called “the best investment you’ll ever make”—but is that really true? In this episode, Tim breaks down what it means to think of a primary residence as an investment, comparing real estate returns to long-term stock market performance. Using real numbers, historical data, and examples, he highlights the risks, tax benefits, and long-term advantages of homeownership while challenging some common assumptions. Whether you’re considering buying your first home or wondering about the financial trade-offs, this episode offers a clear-eyed perspective on when (and how) owning a home makes sense.

Key takeaways:

1.  Buying a primary residence is not technically considered an investment because it is purchased for personal use (rather than to generate income). For this discussion, though, let's set aside the technical definition and evaluate buying a home as if it were an investment.
2. Investment comparisons must be made against alternatives; here, the U.S. stock market is used as the benchmark. Using a $500k home with a $100k down payment, 6% mortgage APR, and 6% annual appreciation, we compare the 10-year returns to stock market investing.
3. Under these assumptions, the home sale produces ~44.6% ROI, while stock investments yield ~121.7% ROI, showing the stock market as the stronger performer. But there are other financial benefits to owning a home besides the sale price.
4. Home ownership does provide tax advantages: mortgage interest deductions and capital gains exclusions for primary residences. There's also access to money through home equity loans & lines of credits. And long-term benefits include lower relative housing costs relative to inflation & the potential for generational wealth transfer.
5. Conclusions: short-term home buying as a “step-up ladder” is a poor investment, but long-term ownership (15–30+ years) can make a lot of financial sense.

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The mortgage calculator I used for the examples
The NYT chart of U.S. home prices (adjusted for inflation) 1890-2006
Investopedia – Has Real Estate or the Stock Market Performed Better Historically?