Also, regarding your own house: you can't really draw conclusions from anecdote; also, you home value may be worth 20-30% more than 18 months ago, but that means nothing until you sell. It could drop next year. Meanwhile, you are paying interest and closing costs, repairs, etc. And there is opportunity cost involved with your down payment which could have been invested in the market over the last 18 months, and would have grown substantially. Speaking of which, the stock market increased a lot in the last 18 months, 20-30% increase in home value isn't comparatively much better.
it's only anecdote because i haven't decided to sell, but that's fine. not picking on you specifically, but this forum is WAY too caught up in that concept. but fine, if you want real facts on this specific situation, let's just take the house i owned before.
i agree that it could go down the same as anything else, but my house is no different than any other investment until i sell it. it's paper profit, regardless of asset class. however, i'm sure we both agree the house is far less liquid than most other assets.
we bought the house for $220k in 2003 which included all closing costs, 5% down (so initial outlay of $11k). total payments over the 10 years were $165k (principal was just shy of $71k). We sold for $454k, which netted us $272k at closing.
We put out principal of $82k, got $272k back, so net gain of $190k.
to get the same out of another "investment", and giving those monthly principal payments the benefit of being fully invested at the beginning for an alternative investment, we'd have needed a recurring @ 9.8% return. if i bump that over to monthly investment for the alternative, the required return jumps several more percentage points - you get the point I'm making.
of course I had property tax and maintenance, but for simplicity if we just say those were equal to what renting would have cost me (and those are probably equivalent here meaning I could rent something for a similar cost in my market).
house wins hands down.
My main point? Buying a house with a mortgage is more akin to investing with leverage, and i submit that investing with leverage is a MUCH different risk profile than buying a house.
(as I'm typing I see another post regarading leverage, which is also part of my point)