Humans, myself included, have a habit of making dumb decisions for all the wrong reasons, usually in ways that make life harder than it needs to be.
One of the biggest mistakes is confusing financial return with happiness.
If you’re looking strictly at ROI from a pure financial standpoint, buying a home sits closer to the bottom of the list than the top. As an investment, it’s pretty lousy. It pales in comparison to a long list of other things you could do with your money if your only goal is to build wealth.
If you bought a condo in Manhattan in 2016, your investment over the last decade has been roughly flat when adjusted for inflation. After closing costs, you may actually be losing money. You might have been financially better off not moving at all and putting your cash under your mattress. Had you invested that same money in an S&P index fund in 2016, you would have seen a return of roughly 265 percent.
But while watching a portfolio grow by 265 percent might offer some satisfaction, I’d argue you’d be far happier making the right decision about where exactly you’re going to put that mattress.
Buying the right home, almost at any cost, delivers one of the highest returns on investment for happiness. If you work outside the house and aren’t a couch potato, you spend at least half of your life at home.
But I still witness more than my share of buyers who talk themselves out of the right purchase. They second guess their instincts and overanalyze cost. They ask what the place costs per foot instead of asking how it would feel to have their morning coffee in the kitchen. They ask what the unit upstairs sold for instead of imagining what it would feel like to sit quietly in the corner of the living room at the end of the day.
When buyers say they got a “deal,” that discount is usually around 10 percent. When they feel they overpaid, the premium is also around 10 percent. The real estate market, despite popular belief, is largely self-valuing. It’s not easy to steal something, and unless you’re a complete moron working with a wildly incompetent agent, you’re unlikely to overpay by more than 10 percent.
In the context of roughly 4,000 weeks on this planet, and given how central our homes are to daily life, the decision-making process around buying a home should look very different from how we evaluate other investments.
I’ve seen too many people obsess over price per foot and convince themselves to buy the wrong home for the wrong reasons. They’d rather live in a house where they saved 10 percent than in one that could make them 10 percent happier.
The happiest clients I’ve worked with weren’t the ones who won on price. They were the ones who stopped trying to be clever, trusted their instincts, and chose the home that made their life better. They focused on the 10 percent that matters.
Side Bar
There are a handful of books every aspiring homeowner should read to help reframe what actually matters when buying a home. None of them are about price per foot. All of them are about judgment, time, and happiness.
- Four Thousand Weeks — Oliver Burkeman
A sharp reminder that time is the only real currency, and how you live matters more than how efficiently you optimize. - Blink — Malcolm Gladwell
A study in intuition and rapid cognition, and why trusting your first instinct is often wiser than endless analysis. - Ten Percent Happier — Dan Harris
A practical look at incremental happiness and why small improvements compound over time. - The Art of Happiness — The Dalai Lama and Howard Cutler
A reminder that fulfillment rarely comes from external validation or financial optimization. - Essentialism — Greg McKeown
A framework for focusing on what truly matters and eliminating everything else—including unnecessary regret.