First Person: My Home Was a Good Investment

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I don't really know why I have always wanted to buy a house. For some reason, Americans like to buy expensive dwelling places that take the bulk of their adult lives to pay off. As a homeowner I understand this financial challenge, but I also know that it is very rewarded to come home to something that you own. When I bought a house, I hoped it was going to be a good investment, but that wasn't the primary goal. Years later, it is clear to us that our home was a good investment . Hopefully that will continue to be the case.

An uncertain purchase

We purchased our home in the late 1990s, when prices were quite a bit lower than they are now. Since we live in Los Angeles, houses have not been truly "affordable" for a very, very long time. At the time, we had no idea where the market would go, or how the prices of houses would rapidly increase and then experience a tragic fall. As much as experts talk about the home as an investment, it is hard to forecast the impact of buying a house when you are in the moment. When you are ready to buy, sometimes you just buy.

Ups and downs

We have seen some drastic changes in the market over the last few years. In the years following our purchase, the value of our home increased dramatically. Homes were being grabbed off the market as quickly as they were being posted, and some of the prices seemed ridiculously high. As much as we could only afford the one house, we joked that we should have found some way to buy two and then sell one at the peak of the market. Obviously this was a generally meaningless scenario because we didn't have the money and we had no idea the market would go up so much. In more recent years, the market has obviously come back to earth. We know home buyers that bought at the peak and are now in the dreaded status of being "underwater."

The value of equity

At this point, we certainly have some equity in our house. From a mental standpoint, it is nice to have a home that is worth more than the money that is still owed. However, there is also the reality that equity does us little good unless we want to sell the house. Since that is not part of the plan in the near future, fluctuations in the housing market do not impact our household a great deal. It obviously impacts people we know who are looking, but when you do not plan on selling anything soon, the ups and downs of the market are not quite as important.

When is the right time?

When we purchased our house, there was really no strategy on how to time the market. In all honesty, we didn't know enough about the housing market to do that anyway. We saved for a downpayment and made a decision. At the time, we were very nervous about the purchase and there was the standard fear that sometime in the future we would not be able to make the payments. There is so much hype about the fluctuations of the housing market, but I don't see how consumers can accurately predict anything. Our house has been a good investment, but not because we made a particular wise decision. We have been fortunate.

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