Although the debate over whether a house was considered an asset or not ended with readers on both sides of the fence, I happened to be reading a book that talked about this exact same debate!

The book is called “Protect Your Nest Egg” written by Eric Kirzner and Richard Croft. I am almost done the book and plan on doing a book review on it, but I just had to write about this one chapter.

The authors have 2 conditions that must be satisfied before they consider something a financial asset:

1. The asset must have tangible value - it can be readily exchanged for something else.

2. Your only motivation for holding this asset is to enhance your wealth.

In this case, most people mainly buy their homes to put a roof over their heads - not specifically to make money. So the authors argue that your primary residence is not an investment asset. Of course, they do state that many people would argue that point!

My argument about paying the appreciation premium to the next person you buy your house from is mentioned. The authors say that

You’re really only impacted by the value of your principle residence when you’re downsizing. If you are moving to a better neighbourhood or a bigger home in the same city, you have less of a vested interest in the value of your property. If real estate values are down, you’ll get less money from the sale of your property, but you’ll pay less for the next property you buy.

I realize that this debate could go on and on. I just thought the 2 conditions that they stated for meeting an investment asset was interesting and topical.