Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. Buying a home has long been one of the primary ways Americans build wealth, but owning a home also comes with a long list of expenses that don't show up in the purchase price. Economist Peter Schiff argues those costs can make a house a much worse investment than many people assume.
During an appearance on Graham Stephan and Jack Selby's The Iced Coffee Hour Podcast, Schiff was asked about the common belief that, for many, a house represents their primary means of saving (1). Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one JPMorgan still sees gold hitting $5,000/oz by Q4 — and savvy investors are protecting their wealth with a tax-advantaged Gold IRA. Learn more with a free guide from Priority Gold The tax breaks in Trump's 'big beautiful bill' expire after 2028 — and experts say most people won't act in time.
What to do before the window closes Schiff, who runs Euro Pacific Capital, strongly disagrees with this perspective. "A house depletes your savings. It's a money pit," he said.
"It's crazy the amount of money that a house costs you." While this may sound like it goes against the widely accepted belief that owning a home is more worth your money than renting, home maintenance and repairs do add up. According to a 2022 survey by Hippo Insurance, homeowners spent an average of $6,000 per year on property repairs and maintenance (2). Over the life of a 30-year mortgage, that could add up to $180,000 — which could be nearly half of your home's value, depending on where you live.
And proponents of homeownership often argue that property values appreciate over time, but market dips do happen. In fact, the median sale price of new houses sold in October 2022 was $460,300, but the latest quarterly data puts the median new-home price at $410,700, about 7.2% lower (3, 4). "People think, 'Oh, the house appreciates' — not always," Schiff cautioned.
"It's inflation that's doing it. All that's happening is your land is keeping pace — but houses don't." This raises an important point. If inflation is the main driver, is owning physical property the only way to benefit from rising real estate values?
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