Your First Home Is A Weird Investment

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A little throwaway boilerplate from a good article about the DC housing market like:

For many young professionals, buying a first home is part of the American dream. But that dream now has to factor in a number of other moving parts about whether it will pay off as an investment.

Especially if you’re talking about a “first home,” it bears scrutinizing the concept of what it would mean for a home to pay off as an investment. If you own a first house in the DC area, and plan to eventually sell it and replace it with a larger house in the DC area, then overall trends in DC area real estate prices are irrelevant to you. Your investment will “pay off” if prices go up, but you’ll end up needing to spend more on your second house anyway. It all washes out. If you’re speculating in real estate you don’t intent to live in, things look different. But in terms of a place you inhabit, the relevant consideration is how its price evolves relative to the market average and your odds of doing better than average are 50 percent at all times.