So, what about my wealth?
Careful - the following is an opinion …
The Truth
As far as the homes we live in are concerned, we have developed an endless sea of indistinguishable, subpar housing units sans any inherent value. They are not investments.
Let me break it to you - the homes we build do not belong in any retirement portfolio. At best, they are piles of deteriorating construction materials. The Great Recession a decade and a half ago should have taught us the houses we build are valueless. We saw their purported value pulverize in front of our eyes - almost instantly.
But, Toby, What about my Equity?
Any rise in equity you might experience can be attributed only to inflation and the reevaluation of ZIP codes. It is the patch of land, the property, we have assigned value to and built an entire economy around - not the nonsense we erect on top of it. Yes, that pile of construction material pushes the evaluation a little, but not by much. You could measure this by the pound. We chose square feet. But it hardly matters. Tomorrow it will be torn down. Only the land will be sold. Land ownership is the true currency of our wealth distribution.
The Lack of Value
Our homes are poorly constructed, using low-quality building materials and methods. They are unhealthy, enveloping us in a toxic airborne sludge of mold and volatile organic compounds.. They actively destroy our habitat with a deluge of carbon dioxide into our atmosphere, during their construction, use, and decommissioning. They are not considered, not designed, not appreciated, and not made to respond to any needs of habitation.
If you think ‘but, Toby, I have just redone my kitchen”, or “the fun people on HGTV told me”, or “the nice person in the sales office of my subdivision assured me it’s the new something”, think again. It all amounts to zero value.
If you want to invest, invest in empty lots or rentable real estate.
So why Bother Building?
Of course, we have to live somewhere. We need a roof over our heads. And we yearn for a place we can call home. So much of our lives take place in our homes - they shape us. They are instrumental in the making of the happiness we seek.
Do it Right!
So, despite everything I just said, I urge you to not only spend your hard earned money and life savings to build a home for yourself, I urge you to spend more than what you had considered. Why? First - to do it right. To spend it on those details, parts, construction quality, and design considerations that will make a difference in the quality of your life. And Second - to build your wealth and make it last!
Huh?
You heard me. If you buy a standard car it will be without value in ten years. If you buy or build one of the thousand ubiquitous houses available to you, it, too, will be without value in a decade. However, buy a collector car and watch its value increase. Pay for a house outside the standard real estate metrics, a house that is well considered, crafted, designed, built, and executed, and you've got yourself an investment.
You have to aim past the valueless mediocrity that litters our landscape and go for a building that earns the title “home”. Do it right and build your net worth. There are no two ways about it. Don’t do it and watch your money dissolve. And trust me when I tell you, you have not seen a well designed and well built home yet. Prepare to be impressed!
~ Toby
For More on the Subject
If I have piqued your interest, I filled 240 pages of a book about this.
For a quick visual appreciation of the points made here, watch this short video.