Found myself questioning the standard statement “You house is your biggest investment” last night.  Got up this morning and created a spreadsheet to see if its really true:

Lets start with a basic definition from




1. the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.

The key here is that an investment is suppose to MAKE YOU MONEY, not COST YOU MONEY.  The spreadsheet up in Google Docs shows how a house will cost you money… you can play with the parameters and come up with your own conclusions.  Note the spreadsheet does not take into effect things like the Home Mortgage Tax credit those of us who itemize can currently get (and which is under review to be eliminated).  That tax credit simply impacts how much a house cost you, not that it does.

OK – so what does this show:

Tab 1, Rent vs Buy, shows that owning a home is somewhat cheaper than renting a home.  It presumes you have the fortitude to put your down payment into the stock market and let it sit for 30 years.  If you don’t, renting is a lot more expensive, even after taxes, insurance, repairs, etc.  That makes sense.  The people owning the house have to make a profit to stay in business.

Tab 2, Buy vs Buy Bigger, shows just how bad of an “investment” a house is.  Its an Expense, not an investment, and the bigger the house the greater the Expense.  This tab compares a moderate home with one that cost $100,000 more and shows what would happen if you simply put the difference in down payment ($20,000) into the stock market for 30 years.  Net result, your HALF A MILLION dollars better off living in the smaller house for those 30 years due to stock market investment returns, lower taxes, lower repairs, lower insurance, etc.

So why the push to buy mini-mansions?  I’d venture to say that is being driven by the banks wanting to make more money, the government wanting to stimulate consumerism and collect higher taxes, and peoples nature desire to live-for-the-day in as much luxury as they can afford.

Have fun with the spreadsheet and let me know what you think.