Letter to the Editor: Home investing is not the same as stock investing
Published on Wednesday, October 8, 2025, 10:02 am
To the editor:
Thank you to Professor Walden for highlighting the problems of consumer debt and encouraging everyone to carefully consider the short- and long-term effects of borrowing.
Two points that I respectfully object to.
First, investing in a house is not financially equivalent to investing in stocks. The broadly diversified stock market has returned 10-11% decade after decade. Residential properties (outside of resorts or a major city – NY, San Francisco) have a long term return of 4-5%. And you'll need to maintain and update the property to keep up with square footage values.
A home is a smart purchase and worth taking on debt for, but it's better viewed as a store of value rather than an investment.
Second, every other item you buy will lose value – no matter how long you use it. These include vehicles, washing machines, furniture and smartphones. Borrowing to buy a depreciating asset is never a wise decision.
Aligning the payment term with the useful life of the asset is a sensible business strategy because the asset makes you money when you pay for it.
The path to financial security is easily described.
Live comfortably below your income. No one receives continuous income throughout their life.
Plan your savings and investments before spending money. (Investments are assets that you expect to increase in value and that you sell for a profit. Jewelry or gemstones are not investments. You buy retail and sell wholesale.)
Take out loans just for your home; And don't buy more houses than your family needs to feel safe and comfortable in an area with good schools and good services.
Start early. Be consistent.
Jerry Cohen
Advance payment