It’s very strange indeed that housing is seen as a “safe” asset class, when nothing could be further from the truth. Housing has high beta, it’s illiquid, it’s beset with all manner of external risk factors, and it doesn’t appreciate much despite all that! It’s like the worst in every way that there is for an asset class.

It’s one and only saving grace is that you can live in it.

However, people treat it like it’s some sort of ultra-safe investment when it truly is nothing close to that. Put $300,000 in a mix of stocks and bonds and $300,000 in a house. At the end of 20 years, including inflation and all the maintenance, taxes, etc., you spent on the house, tell me which one do you think will have greater return at the end?

Unless you got lucky enough to buy during a bust and sell during a boom, it won’t even be close. There’s about a 50% chance you will have lost money overall on the house, while you’ll have about $800,000 in nominal dollars from the stock-bond mix, assuming a historically-conservative pre-inflation 5% return rate. In real dollars indexed to the initial investment year, assuming around a 2.2% rate of inflation, that’s about $500,000.

Very, very little chance a house will come close to that — and as mentioned, it definitely will come with a huge passel of risks and is terribly illiquid to boot, being particularly so when you most need to sell it.

Sounds like a bum deal to me (unless you are buying just to live in, which is perfectly fine).