Your Home Is a Personal Asset

Your home is your sanctuary. It is your comfort zone and where you spend a good deal of your time. You sleep, cook, eat and entertain at home. For some, you may even work from home.

It is no surprise, then, that we want our homes to be comfortable and nice. We want to be proud to show off our home to guests. That is why we keep putting more and more money into our homes.

There is always a project to be done. Maybe your house needs to be painted inside and out. Maybe you would like to entertain more, so you completely revamp your yard and deck.

Of course, when one project is completed, another part of your home will likely need to be spruced up as well. You will want new furniture to go along with the enlarged patio. When your child goes off to college, you may turn his bedroom into a home office. Out with the bed and dresser and in with the new office furniture.

Year after year, we continue to make our homes into special places. And then one day you decide to sell. Good reasons to make such a change abound. The kids grow up and you no longer need all that space to entertain them and all their friends. You get tired of maintaining a large home and yard and decide to downsize.

When the day comes to sell our homes, we are often surprised that they were not the investment we thought. We shouldn’t be. Real estate generally appreciates at about the rate of inflation, but this varies greatly from location to location. Unless you magically time your purchase and sale to coincide with the ups and downs of the housing market in your area, you may lose money.

Unless you turn your home into a rental property, consider it a personal asset, not an investment; we tend to buy and sell homes as life circumstances, not profit opportunities, direct. Your job may be transferred, or your children may want to attend college out of state and so you move to get in-state tuition. Your health may require you to move into a senior living community or closer to family.

If you are lucky, your home will appreciate in value during the time you own it. However, it could also depreciate in value, depending in part on the local economy. And don’t forget that if your house appreciates, your annual costs to own the home go up. Property taxes and insurance premiums are based on the estimated value of your home.

If you are counting on getting a large lump sum from the sale of your home for funding your retirement, beware this may not pan out. When the time comes to move, you may have family and friends living nearby and remaining close to them can become a priority in addition to price.

Remember that in general the cost of new housing keeps increasing also. A plan to downsize may still take all of your net proceeds, plus more funds, to get into a smaller home in the location you desire.

A home is a personal asset that frequently will cost you over time. It is also a place of great importance and around which your life revolves. If you are lucky, you may make money on the sale of a home, but don’t be too disappointed if you do not.

This commentary originally appeared May 4 on

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