I got a feeling that you want to debate the semantics of the word ‘investment’, which of course is up for everybody’s individual interpretation, so I’ll go ahead and share mine.
First off I’d like to point out that I don’t consider one’s personal home an investment. Your home is alot of things, your refuge, your escape, your piece of the American dream, your shelter, but it’s not an investment property. Investing in real estate isn’t the same as owning a house.
Alot of people around the country will end up spending more money living in their home than they will when they sell it. Dallas (where I currently reside) is a great example of this as I’m seeing homes sell for the same price as they were 10 years ago. After you factor in the fact that the dollar is worth less, property taxes, insurance, maintenance…alot of people will lose money if they sold now (after buying 10 years ago). This scenario obviously isn’t investing….
Investing is when you use money to make more money. To be considered an investment, real estate must generate actual profits, either immediately in the form of income or long term in the form of appreciation. In either case, the property must cover all it’s own costs and produce a reasonable return on the money you spent to buy it.
It would be foolish for anybody to argue against the Shiller data, but it’s equally as foolish not to consider the fact that real estate investors invest using leverage. So just using the Shiller data as the backbone of your case is flawed.
I of course don’t need to explain such simple concepts to an accountant….and since you are an accountant I’m not going to do the simple math that would prove what I just said…
