Why your house is not an investment

Your house is not an investment. It is an asset.

I was talking to one of my neighbors. We’re both overwhelmed by our large suburban yards. She had talked about selling but decided not to. Her problem? Despite it being worth at least double what she paid for it, she can’t find anywhere to buy that would let her take out that money and not live somewhere completely impractical. Sure you can get a $100k home in temple, but that commute isn’t worth it.

I decided to quit. Give up on trying to maintain my yard. Something had to change. When we moved into this house I wanted to move into a garden home. I was already done doing yard work. A decade of substantially increased yard work has not made things better. And moving from working from home, to working in the office meant I no longer could keep up.

So I started looking around at homes. Selling our house we could afford a half million dollar house with only a small increase in house payment. Which sounds great. The only problem? It would increase our tax payment by 225%. Which would be like adding another half a house to our house payment. And unlike a house payment if our house keep going up in value that amount would keep going up. 10% a year increase in taxes on a half million dollar house is a substantially larger number than 10% a year increases in taxes on a quarter million dollar house.

So do we have an asset that has increased in value? Nope. We have an asset that has inflated in value along with all the other homes around us.

So we’re taking out a home equity loan and paying someone to make the yard lower maintenance. Also we’re going to do a ton of work ourselves and invest tons of money in those projects.

Because we’re trapped here in our “largest investment”.