Is buying a primary residence actually a good investment?

papa štrumf is basically saying:
it all comes down to your "why"—that's what decides if you're just dropping cash or actually building wealth.

Think about it this way—if you're buying a place to actually live in, you're taking on an expense. But if you're hunting for that perfect flip to sell later? Now you're talking about an investment.

mistystag90 said:mellowraven8

You haven't actually banked that $60,000 profit until you sell it for significantly more than your initial buy-in. Take me for example: back in 2007, I held shares that were trading at a massive premium compared to where they are now. But because I sat on them and didn't pull the trigger, I’m nowhere near the level of profit I thought I had back then.

In my opinion, until you cash out at that price point, you're just looking at an unrealized cost. Plus, once you do sell, you still have to deal with reality—you'll need to find somewhere else to live, whether that means buying a new place or renting. If we're talking about a rental property you don't personally occupy, then sure, that's a clear-cut investment.

If (or rather, when) capital gains taxes eventually get implemented, I think it would be a massive blunder to tax the potential gains on a primary residence—the home you actually live in—just because it sells for more than what you originally paid.

I get that, and I'm pretty sure those gains are just going to shrink or at least hit a massive plateau over the next few years.

mistystag90 said:mellowraven8

You haven't actually banked that $60,000 profit until you sell it for significantly more than your initial buy-in. Take me for example: back in 2007, I held shares that were trading at a massive premium compared to where they are now. But because I sat on them and didn't pull the trigger, I’m nowhere near the level of profit I thought I had back then.

In my opinion, until you cash out at that price point, you're just looking at an unrealized cost. Plus, once you do sell, you still have to deal with reality—you'll need to find somewhere else to live, whether that means buying a new place or renting. If we're talking about a rental property you don't personally occupy, then sure, that's a clear-cut investment.

If (or rather, when) capital gains taxes eventually get implemented, I think it would be a massive blunder to tax the potential gains on a primary residence—the home you actually live in—just because it sells for more than what you originally paid.

To be specific, my current mortgage payment is basically the same as what I’d pay in rent
(maybe even slightly less)

So, the cash outflow is roughly the same.

This isn't some hypothetical fantasy or a math exercise; it's a real-world scenario.

And in this particular case, I'm actually in the green so far...

Sophia White said:Check out this data from back in July 2008: "Federal Reserve analysts found that real estate prices in the US shot up by 89.9 percent over the previous decade—with a massive 61.6 percent of that jump happening in just the last four years alone. Compare that to the stretch between 1997 and 2003, where things were way more chill, growing by only about 17.5 percent total."

So, yeah—anyone who pulled the trigger ten years ago is sitting pretty right now. But here’s the real question: are you actually expecting that kind of crazy appreciation over the next five or ten years? Like, does buying right now even qualify as an "investment" if you're looking for those kinds of returns?

And let’s be real for a second—even if someone made a killing selling a place they bought a decade ago, they can only actually pocket that cash if they decide to walk away from owning property altogether. Because if they want to stay in the game and buy another place, the price of that new home has likely climbed right along with their old one. It’s like a shell game where you move from one expensive house to another... so when you crunch the numbers, your actual profit ends up being basically zero.

Growth started picking up here in San Diego around late 2002, eventually hitting its peak in 2008.
Prices shot up by an average of 200-250% in just six years.
From 700–900 up to 1,800–2,000.

Phase one was just the price correcting itself from being way too low back to reality. After that, investors and buyers just let greed take over.

Personally, I’m bracing for prices to bottom out like they did back in 2013 or 2014—we're looking at roughly 60-65% of those 2008 levels.
Somewhere between $1,150 and $1,400.
And that might even be a conservative estimate. It could easily go deeper.

Sophia White said:Check out this data from back in July 2008: "Federal Reserve analysts found that real estate prices in the US shot up by 89.9 percent over the previous decade—with a massive 61.6 percent of that jump happening in just the last four years alone. Compare that to the stretch between 1997 and 2003, where things were way more chill, growing by only about 17.5 percent total."

So, yeah—anyone who pulled the trigger ten years ago is sitting pretty right now. But here’s the real question: are you actually expecting that kind of crazy appreciation over the next five or ten years? Like, does buying right now even qualify as an "investment" if you're looking for those kinds of returns?

And let’s be real for a second—even if someone made a killing selling a place they bought a decade ago, they can only actually pocket that cash if they decide to walk away from owning property altogether. Because if they want to stay in the game and buy another place, the price of that new home has likely climbed right along with their old one. It’s like a shell game where you move from one expensive house to another... so when you crunch the numbers, your actual profit ends up being basically zero.

The answer is right above. Not in six years.
If you bought at the absolute peak, don't expect any real gains anytime soon.
Even if prices crawl back up to exactly what you originally paid, you're still losing.

Sophia White said:Check out this data from back in July 2008: "Federal Reserve analysts found that real estate prices in the US shot up by 89.9 percent over the previous decade—with a massive 61.6 percent of that jump happening in just the last four years alone. Compare that to the stretch between 1997 and 2003, where things were way more chill, growing by only about 17.5 percent total."

So, yeah—anyone who pulled the trigger ten years ago is sitting pretty right now. But here’s the real question: are you actually expecting that kind of crazy appreciation over the next five or ten years? Like, does buying right now even qualify as an "investment" if you're looking for those kinds of returns?

And let’s be real for a second—even if someone made a killing selling a place they bought a decade ago, they can only actually pocket that cash if they decide to walk away from owning property altogether. Because if they want to stay in the game and buy another place, the price of that new home has likely climbed right along with their old one. It’s like a shell game where you move from one expensive house to another... so when you crunch the numbers, your actual profit ends up being basically zero.

Yeah, but...
If neither of them started with anything and this is their only place, then what?

If you buy a place at a lower price, you’re stuck taking out a smaller loan than someone who overpaid. It's basic math.
Cheaper apartments have less downside risk and way more room to grow compared to the high-end stuff.

Buying a place to live can be a total win or a massive mistake. It’s not something you can just brush off.
Look, an investment can be a winner or a total bust. It’s no different from anything else—stocks, mutual funds, even starting your own business. It all goes either way.

mellowraven8,

I’ve got no clue what the rental market looks like in San Diego, but where I’m living, if you're looking at an apartment worth roughly $150,000, you’re looking at monthly rent anywhere from $2,500 to $1000, depending on how nice the place is. So, go ahead—do the math and see what a mortgage payment would actually look like for a spot like that!

The other thing is, which one would actually let you sleep better at night? Living in a place tied to a massive mortgage that you might lose if you hit a rough patch with work, or staying in a rental where you can stash the difference between rent and a mortgage payment into savings? That cushion could give you a few months, maybe even a year, of breathing room depending on how you play it.

Betty Perez81 said:mellowraven8,

I’ve got no clue what the rental market looks like in San Diego, but where I’m living, if you're looking at an apartment worth roughly $150,000, you’re looking at monthly rent anywhere from $2,500 to $1000, depending on how nice the place is. So, go ahead—do the math and see what a mortgage payment would actually look like for a spot like that!

The other thing is, which one would actually let you sleep better at night? Living in a place tied to a massive mortgage that you might lose if you hit a rough patch with work, or staying in a rental where you can stash the difference between rent and a mortgage payment into savings? That cushion could give you a few months, maybe even a year, of breathing room depending on how you play it.

The answer is simple: timing isn't always on your side when it comes to investing.

Let's look at the math—say you bought a place for $60,000.

Look, I’m originally from Charleston, and honestly, if you’ve only got 60,000 Euros to work with, you’re looking at nothing more than some mediocre starter property 😁

The reason I keep bringing up Charleston is because I think you’ve seriously overestimated what a $350 rent makes sense for an apartment similar to yours:

1. In Charleston, even for a place slightly smaller than yours, the rent sits right around $350 because the market value there is easily 50% higher than what you're describing.

2. Also, if your place is worth twice what it was when you first got it, that implies the rent used to be significantly lower back then—way less than what you're claiming now.

And here’s one more reason why renting might actually be smarter than taking out a massive mortgage and trying to save the difference: by staying flexible, you can just chill and wait for the perfect window where interest rates drop and housing prices finally cool down before you commit to buying!

Betty Perez81 said:Look, I’m originally from Charleston, and honestly, if you’ve only got 60,000 Euros to work with, you’re looking at nothing more than some mediocre starter property 😁

The reason I keep bringing up Charleston is because I think you’ve seriously overestimated what a $350 rent makes sense for an apartment similar to yours:

1. In Charleston, even for a place slightly smaller than yours, the rent sits right around $350 because the market value there is easily 50% higher than what you're describing.

2. Also, if your place is worth twice what it was when you first got it, that implies the rent used to be significantly lower back then—way less than what you're claiming now.

And here’s one more reason why renting might actually be smarter than taking out a massive mortgage and trying to save the difference: by staying flexible, you can just chill and wait for the perfect window where interest rates drop and housing prices finally cool down before you commit to buying!

So now tell me—is this price actually sustainable long-term? Is this actually a good time to buy?

Betty Perez81 said:Look, I’m originally from Charleston, and honestly, if you’ve only got 60,000 Euros to work with, you’re looking at nothing more than some mediocre starter property 😁

The reason I keep bringing up Charleston is because I think you’ve seriously overestimated what a $350 rent makes sense for an apartment similar to yours:

1. In Charleston, even for a place slightly smaller than yours, the rent sits right around $350 because the market value there is easily 50% higher than what you're describing.

2. Also, if your place is worth twice what it was when you first got it, that implies the rent used to be significantly lower back then—way less than what you're claiming now.

And here’s one more reason why renting might actually be smarter than taking out a massive mortgage and trying to save the difference: by staying flexible, you can just chill and wait for the perfect window where interest rates drop and housing prices finally cool down before you commit to buying!

I didn't inflate the rent; if anything, I undershot it.
Honestly, I doubt anyone else would even let a tenant through the door for $833.
It's a top-floor unit: 63 m2 of standard living space, plus an extra 17 m2 I didn't even pay for (lower ceiling, but great for built-ins), 15 m2 of attic space, a 5 m2 balcony, and a 2 m2 storage nook in the hall.

Betty Perez81 said:Look, I’m originally from Charleston, and honestly, if you’ve only got 60,000 Euros to work with, you’re looking at nothing more than some mediocre starter property 😁

The reason I keep bringing up Charleston is because I think you’ve seriously overestimated what a $350 rent makes sense for an apartment similar to yours:

1. In Charleston, even for a place slightly smaller than yours, the rent sits right around $350 because the market value there is easily 50% higher than what you're describing.

2. Also, if your place is worth twice what it was when you first got it, that implies the rent used to be significantly lower back then—way less than what you're claiming now.

And here’s one more reason why renting might actually be smarter than taking out a massive mortgage and trying to save the difference: by staying flexible, you can just chill and wait for the perfect window where interest rates drop and housing prices finally cool down before you commit to buying!

We established a long time ago that rental prices don't move in lockstep with property values.

Betty Perez81 said:Look, I’m originally from Charleston, and honestly, if you’ve only got 60,000 Euros to work with, you’re looking at nothing more than some mediocre starter property 😁

The reason I keep bringing up Charleston is because I think you’ve seriously overestimated what a $350 rent makes sense for an apartment similar to yours:

1. In Charleston, even for a place slightly smaller than yours, the rent sits right around $350 because the market value there is easily 50% higher than what you're describing.

2. Also, if your place is worth twice what it was when you first got it, that implies the rent used to be significantly lower back then—way less than what you're claiming now.

And here’s one more reason why renting might actually be smarter than taking out a massive mortgage and trying to save the difference: by staying flexible, you can just chill and wait for the perfect window where interest rates drop and housing prices finally cool down before you commit to buying!

That isn't always true, but right now, it is.