Why buying a home is usually a terrible investment (vs buying bitcoin).

[Z-tight]

The real estate market is not the same in all parts of the world, you must put that into consideration. Buying a home is not a terrible investment, if you can afford one or if you have the resources to secure and pay off your mortgage. We are pro bitcoiners, but some of us now believe that it is the only type of investment one can engage in, which is wrong, people have been into the real estate business for a very long time and so many of them have been successful in it, if you do it right, then it is a great investment.

One thing i can say about real estate is that it is expensive to purchase, even if you want to get a land or a home in a 'cheap' area, it would still cost you a lot, but you can buy BTC with just a small amount of money and grow up your investment.

[Alpha Marine]

This constant comparison with Bitcoin and every other form of investement is totally unnecessary. Some investments are for a longer term. The fact that a person doesn't make any profit on his investment in the first year doesn't make it a bad investment. I can use this same logic to say Bitcoin gives you double or triple your investments in a year while there are altcoins that will give you x6 of your investment in profit within a couple of months. Does that make Bitcoin any less of an asset?

Btw, owning a house in the US might be as bad as you say which I don't buy at all, but in my country and many other countries, it's not so. When you have a house for rent, your rent can easily go up as inflation goes up so you're not in any loss. You pay property tax from the rent received. So if the property tax and other taxes increase, all the landlord has to do is increase the rent.

Having multiple houses for rent is as much a good investment as bitcoin. In fact, this is a steady source of income. A time might come when you might not be able to work but you can keep receiving your profits. With the high rate of demand for houses these days (in my country at least), there will always be people looking for houses to rent. All you have to do as the landlord is make sure the building is always in perfect condition so people can be attracted to it. Real estate is a good investment in my part of the world, it may be expensive but that doesn't make it a bad investment.

[C10H15N]

Home ownership in the US is a wonderful thing.  The home that I bought in 2000 for $160K is now worth $400K,
I carried a mortgage on it for twenty years, but did refinance several times to lower the interest rate and did pay it off ten years early.
I now have a nice place to live for the rest of my life that is a reasonable appreciable asset that I only pay property taxes, insurance, and maintenance on.
I will never pay rent and therefore will never see a rent increase.  

That being said, most of my investments have outperformed my home, but I can't live in them. 😜

[WatChe]

The real estate market is not the same in all parts of the world, you must put that into consideration. Buying a home is not a terrible investment, if you can afford one or if you have the resources to secure and pay off your mortgage. We are pro bitcoiners, but some of us now believe that it is the only type of investment one can engage in, which is wrong, people have been into the real estate business for a very long time and so many of them have been successful in it, if you do it right, then it is a great investment.

One thing i can say about real estate is that it is expensive to purchase, even if you want to get a land or a home in a 'cheap' area, it would still cost you a lot, but you can buy BTC with just a small amount of money and grow up your investment.

The best thing about Bitcoin is that you can start your investment with even 10$ and if you don't have huge capital then you can build a good profile by investing in DCA manner i.e. invest 10$ or 100$ per week over a longer period. But if you wan't to buy a home then you defiantly need a large Lump Sum capital.
Real estate is not a bad investment provided you do proper work prior to your investment. The price of house in my country (Pakistan) are always going up and I haven't seen that house price in good locality have gone down significantly.     

[Tmoonz]

Owning a house might not be a good idea in the US but lucrative in other countries. I know that there are countries where the price of houses appreciated more than 5%-6%. In my country, houses' value can appreciate 100% in five years depending on the location. If you live in an area experiencing a population explosion and increased tourism, you might understand my view.

There was an anti-tourism protest in Malaga, Spain because the the price of rent increased by 16.5% in a single year. House owners in such locations will be making good profits. There are also some countries where the government don't charge as high as 1% yearly property tax. In some countries, property tax doesn't even exist. Bitcoin is a good investment, however, diversifying your investment to the property business is not also a bad idea.

You are absolutely correct and I completely agree with you 100 percent, in my countryside if it could be that you have a house in an undeveloped area and as time goes on when such area begins to become developing than before it apparently affect the cost of that house. However, housing can be a good business but there shouldn't be any reason for comparison, perhaps Bitcoin is a digital asset while housing is a physical asset that is entirely not related to Bitcoin and at such wouldn't be a bad idea for diversification especially when one has already made a good size of Bitcoin in order not to be distracted and at such make a hesitant decision.

[Helena Yu]

What? I don't believe this. If somebody offers me a house at a 50% lower price I would definitely buy(or rent) that house. I wouldn't even care who committed suicide or who got killed inside that particular house. I'm not superstitious. Committing suicide due to "high social expectation" seems like the dumbest thing ever.

I don't think you can judge like that, I believe the country where you live is also has high social expectation because it happen everywhere. If you didn't suffer in this social expectation, then I can say you're already above average and you can enjoy your life, unfortunately most people don't have the same privilege.

I would gladly rent or even buy a house where the renter or owner committed suicide. Was it the house that made them commit suicide? Maybe this might be related to the cultural or religious orientation of your location. In my country, people are buried inside houses and immediately after the burial, the rooms are worked on for rentage . People don't care who was buried there because there is a shortage of accommodation. 

I thought it only happen in my country, but check this. Well, they don't care in that house because you said there's a shortage of accommodation, so they don't have any other choice.

Based on my research, it seems like the average discount to market for a tragic death on the property is somewhere between 15% – 25% in America. Tragic deaths include: homicide, suicide, death by fire, death by electrocution, death by falling.

[kentrolla]

This may stand true for Americans or some expensive European nations but that's not the case with rest of the world and I can say owning a house is the best investment for many and when I say house I mean having their own land and building a house on it and not the cramped apartments wherein you hardly get any piece of land and die paying the EMIs. People in other countries can afford to have house without mortgages and I have seen people living their life with only one source of income which is the rental income they get from the house they own and rent out. House is basic necessity as we need food, water and shelter to survive even in the worst case situation.

I don't think we should be comparing between Bitcoin and house. Your thoughts may stand true only for selected geographical region but not everywhere.

[shield132]

Most people buy into the myth that buying a home is the best investment you can ever make...but more often than not that idea is just a myth.

Take the US as an example. The average house in N. America appreciates 5 to 6 per cent per year, which sounds great at first glance. In 10 years the value of your house will almost double.

But  most people don't take into account the interest rate where the average homeowner is paying approx. 6% annual interest on a typical 30-year fixed mortgage.
So the interest alone is wiping out the gains on your annual 6% appreciation. On top of that you are paying 1% property tax year every year, maintenance and repair costs, etc.

Making matters  worse is that for the first ten years or so most or all of your payments are applied to the interest, so you wont have any actual ownership or equity of the home,
or very little...for the first ten years. And consider that much of the appreciation of your house is simply due to inflation. So if inflation is 5% per year then that alone is undermining your actual appreciation.

I'm not saying that owning a house is a bad thing, there are certainly benefits to home ownership. It provides you with a place to live, you can borrow against it,
you can pass it down to your kids, etc. If you just want to have a place to live and call your own then owning a house may be a great idea for you, but don't think of it as some kind of
incredible financial investment because it is not as great as you may think.

Buying a home is definitely one of the best investments in terms of income guarantee and peace of mind. It's very simple, you buy a home, get insurance, partner with real estate agencies and they take care of the rest while you sit at your home and get income in your pocket.
Buying a house requires you to be a millionaire, so this market is not for everyone, unlike Bitcoin and cryptocurrencies. For rich people, the real estate market is the best option. Rich people don't need to gamble with their money on crypto, they prefer low but steady, guaranteed profit. Bitcoin is mostly for those who are willing to risk more with the possibility of getting more rewards. We all are different risk-takers.

[Plaguedeath]

Home ownership in the US is a wonderful thing.  The home that I bought in 2000 for $160K is now worth $400K,
I carried a mortgage on it for twenty years, but did refinance several times to lower the interest rate and did pay it off ten years early.
I now have a nice place to live for the rest of my life that is a reasonable appreciable asset that I only pay property taxes, insurance, and maintenance on.
I will never pay rent and therefore will never see a rent increase.  

That being said, most of my investments have outperformed my home, but I can't live in them. 😜

It sounds great that your property now 2.5x times more than initial price, but actually you only earn $50K. Probably the interest rate already taken your $50K profit, so it can be said that you're paying the same amount like now your house worth.


https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator

Buying a home is definitely one of the best investments in terms of income guarantee and peace of mind. It's very simple, you buy a home, get insurance, partner with real estate agencies and they take care of the rest while you sit at your home and get income in your pocket.
Buying a house requires you to be a millionaire, so this market is not for everyone, unlike Bitcoin and cryptocurrencies. For rich people, the real estate market is the best option. Rich people don't need to gamble with their money on crypto, they prefer low but steady, guaranteed profit. Bitcoin is mostly for those who are willing to risk more with the possibility of getting more rewards. We all are different risk-takers.

Because there are no reason for them to gamble with the money they have, "their low income" is already bigger than the poor people earn money by gambling shitcoins. If I were millionaire, I would choose the same thing, I can relax, traveling and enjoying the life without being anxious with my investment.

[Churchillvv]

Perhaps OP seems to be biased based on his location or his point of view is dependent on his financial experience in a location but in other parts of the world owning a home or house could be one of your biggest investments just as the first commenter said, personally I live in a place where house profit increase very high every year houses are rated higher than before so if you could make an investment into it it wouldn't be a bad idea.

If you feel it's not wise to buy a house as an investment it's your own view but for someone like me and where I live buying a house is very good and infact it is the interest or profit it generates that turns real estate investors into millionaires over few years perhaps it's also very good to invest in bitcoin which is our aim here in the forum but at some point where you have achieved a good portfolio diversification is necessary.

[Hatchy]

I'm not saying that owning a house is a bad thing, there are certainly benefits to home ownership. It provides you with a place to live, you can borrow against it,
you can pass it down to your kids, etc. If you just want to have a place to live and call your own then owning a house may be a great idea for you, but don't think of it as some kind of
incredible financial investment because it is not as great as you may think.

There's nothing bad in buying or getting a home instead of BTC investment. One can make huge profits from rent yearly to  continually purchase BTC using the dca method. In my country, owning a house is the best investment you can think of, that because you can make so much profits from rentage. So no, it's not a terrible investment at all. Though the cost of building a hux might be very high now due to cost of building materials and labor, one can be rest assured that he will have returns more than what he spent in building his house in less that 10 years of rentage. This money can then be used to purchase BTC.

[LogitechMouse]

Most people buy into the myth that buying a home is the best investment you can ever make...but more often than not that idea is just a myth.

Is it? Ohhh, I've heard it in the past and you know who those people are? Those are the people who don't even know what's the definition of investment is. Those are the people who don't even have any investment or asset at all. As for me, I also thought it when I don't have any knowledge about investment, but as I learn even more, I realized that it was a wrong mindset. Robert Kiyosaki helped me realized it as well that a home will only be an investment when it gives money to you.

I'm not saying that owning a house is a bad thing, there are certainly benefits to home ownership. It provides you with a place to live, you can borrow against it,
you can pass it down to your kids, etc. If you just want to have a place to live and call your own then owning a house may be a great idea for you, but don't think of it as some kind of
incredible financial investment because it is not as great as you may think.

Having your own home is still a good thing, but there are people who prefer renting rather than buying their own home for some reasons. For me, having your own home means having a security for you, your family and your future. Like you said, it provides a place to live, and for me, having a home adds comfort. Now for the subject title, I don't see buying a home as a investment at first place "UNLESS" you will be using that home for rental purposes. If you buy your own home and you will live on it, I don't consider it as an investment, but more of a liability already.

[TheUltraElite]

OP, the US is not the entire world. There are 194 other countries out there.

And if you need a place to live you have nothing else to do in the majority of these countries but to buy a house. Otherwise you will be sleeping on a mat in the roads with the risk of being run over by some millionaires lamborgini

So unless you want to land up as a paraplegic, get yourself a house before you start buying bitcoin.

[kryptqnick]

It's good that others have mentioned that the situation can vary greatly depending on the country. Buying houses is usually done by paying the whole price at once in my country because mortgage rates are outrageous and the lack of trust in long-term stability on both sides makes it difficult to go down this road.
Having a place to live in certainly nice. I don't know about houses, but if it's a flat, you don't need to just wait and do nothing, hoping the value will grow in 10 years. You can rent it out in the meantime, enjoying monthly returns on your investment, and then you can sell  it. At least, that's how it works in my country.

[m2017]

Most people buy into the myth that buying a home is the best investment you can ever make...but more often than not that idea is just a myth.

If this myth has formed in society, then it means that someone needs it/profits from it.

I suppose, construction companies (the cost of construction is incomparably lower than the selling price) and real estate agencies.

Take the US as an example. The average house in N. America appreciates 5 to 6 per cent per year, which sounds great at first glance. In 10 years the value of your house will almost double.

I wonder how much inflation will increase over the same 10 years?

But  most people don't take into account the interest rate where the average homeowner is paying approx. 6% annual interest on a typical 30-year fixed mortgage.
So the interest alone is wiping out the gains on your annual 6% appreciation. On top of that you are paying 1% property tax year every year, maintenance and repair costs, etc.

Undoubtedly, owning a home is a financial burden. Which can be optimized if you can make this property bring not passive (imaginary double appreciation in 10 years), but active income (rent), and then it can be called a good investment.

Making matters  worse is that for the first ten years or so most or all of your payments are applied to the interest, so you wont have any actual ownership or equity of the home,
or very little...for the first ten years. And consider that much of the appreciation of your house is simply due to inflation. So if inflation is 5% per year then that alone is undermining your actual appreciation.

If a house is purchased on credit, then this undoubtedly involves considerable risks.

I'm not saying that owning a house is a bad thing, there are certainly benefits to home ownership.

This is neither good nor bad. It all depends on the situation. If you are a proud homeowner and your home is in a war zone (maybe a natural disaster like a flood or earthquake or a city with a population outflow like Detroit), is that home a good investment? What about bitcoin? What would you choose in that case?

It provides you with a place to live,

Don't mix these two different functions: a house as a place of residence and a house as an investment.

you can borrow against it,

In this case, a home is a better choice than living in a rental property, which you pay for but don't actually own (unlike buying a home on credit) - money down the drain.

you can pass it down to your kids, etc.

Bitcoin is even easier to pass on as an inheritance.

If you just want to have a place to live and call your own then owning a house may be a great idea for you, but don't think of it as some kind of
incredible financial investment because it is not as great as you may think.

There is another nuance: once you buy a house, you may want to live (for various reasons) in a completely different place, country and house.

[Marykeller]

Where I come from, building a house is one of the most important investments to have for your children. Parents do their best to secure housing projects for their children so that in the future, their children can rely on the housing their parents built for them for survival. By so doing, parents have indirectly secured a future investment for their children. Which they can say it's not a terrible investment because it will be passed down to their children to take after them. What their children will do is to put the house in order(maintain it) from time to time.

[ChiBitCTy]

Buying a home and buying bitcoin are NOT comparable, and honestly it's a bit of a ridiculous topic.  As I've written about many times here before, bitcoin is NOT a replacement for the stock market, gold, home buying etc.  Bitcoin is inherently NOT and investment and it's important to never forget that. 

Why compare two such things?  Last time I checked you can't live in bitcoin.  There's also NO GUARANTEE that bitcoin will continue performing well and to continue to be an asset/investment (though remember, it's inherently NOT one).

[coolcoinz]

Take the US as an example. The average house in N. America appreciates 5 to 6 per cent per year, which sounds great at first glance. In 10 years the value of your house will almost double.

But  most people don't take into account the interest rate where the average homeowner is paying approx. 6% annual interest on a typical 30-year fixed mortgage.
So the interest alone is wiping out the gains on your annual 6% appreciation. On top of that you are paying 1% property tax year every year, maintenance and repair costs, etc.

Are you talking about buying a house on credit, or investing? When I invest into bitcoin I use the money I already have, not money I have to borrow. This means that to compare these two things we'd have to talk about buying bitcoin or a house with cash for investment purposes.
People who buy a house with cash don't have any interest rates to pay and in many countries you don't pay 1% of the value in tax. I lived in a couple of EU countries in my life and the tax was always a fixed rate per meter. I own a 100m worth about $300k (not counting the land it's on) and I barely pay $1k of property tax per year for it.

What about buying a house for investment + personal use? When you live in it, even if it's only 6 months each year, the numbers look even better.
What about renting it out, even occasionally? A month of renting house to someone can cover property tax for the whole year.

[pawanjain]

I don't know about other countries but buying a house in my country is definitely a terrible idea.
Firstly, we have to pay tax on our income. Then we buy a property and start paying property tax.
Then we take a home loan and start paying EMIs for the loan.
We contruct the house by purchasing things on which we have to pay more taxes.
Once we are done with the house, if we rent it out to someone else then we have to pay taxes on the rental income as well.
At some point of we decide to sell the house then we have pay tax on that income too.
It's a trap to be honest. We should only buy a home if it's like a dream for us and otherwise we should never consider this option for invesment purpose.

[C10H15N]

…It sounds great that your property now 2.5x times more than initial price, but actually you only earn $50K. Probably the interest rate already taken your $50K profit, so it can be said that you're paying the same amount like now your house worth.

That would be true, except for much of the life of my mortgage the interest paid on my mortgage was tax deductible.  This placed me in the position of exceeding the then much lower standard deduction and allowed me to deduct a much larger range of expenses including work, medical, and charitable contributions.  This came to an end when the mortgage deduction was eliminated and the standard deduction raised - an event that precipitated me paying off the mortgage.