Buying your home isn't an investment, it's only an investment if you can sell it at any time.
Risks of buying your home include:
- Not being able to move if you can't sell (because the market isn't right)
- Being stuck in a house where you pay a high mortgage while you could rent for much less after a crash (what happened in Spain after 2008). Note than in US you can give up your house and your mortgage goes away, but that doesn't work this way in Europe. The bank sells your house and if it doesn't cover the mortgage you still owe the rest
Also if you sell too early after buying, you're losing money because you pay more in transaction fees that you would have in rent (unless there is a big spike in prices).
Anyway, for a long time real estate have been steadily appreciating and people (especially boomers) got used to it, to the point that all their reasoning about real estate is that it's appreciating faster than inflation. It was true for a long period but that's no longer the case.
If you live in a country with mass migration then both house prices and rental prices increase almost constantly. I lived in London from 1996-2015. I bought a house in 2000, it tripled in value by 2015 and I sold up and moved out of London. Its kind of mad.
Risks of buying your home include: - Not being able to move if you can't sell (because the market isn't right) - Being stuck in a house where you pay a high mortgage while you could rent for much less after a crash (what happened in Spain after 2008). Note than in US you can give up your house and your mortgage goes away, but that doesn't work this way in Europe. The bank sells your house and if it doesn't cover the mortgage you still owe the rest
Also if you sell too early after buying, you're losing money because you pay more in transaction fees that you would have in rent (unless there is a big spike in prices).
Anyway, for a long time real estate have been steadily appreciating and people (especially boomers) got used to it, to the point that all their reasoning about real estate is that it's appreciating faster than inflation. It was true for a long period but that's no longer the case.