A while back there was a blogosphere debate about whether a home is an investment. Renewing the discussion, economist Chip Case (as in Case-Shiller) wrote an op-ed today explaining how he thinks of a house as an investment. Reuters' Felix Salmon has argued the opposing side, so he called Case to get a better explanation of his argument. Salmon found that Case sees a home as a different kind of an investment from a financial security. It provides returns for its lifetime, much like other durable goods. He says:
Firstly, when Case says "think of it as an investment", he's not using the word "investment" to mean "something which holds its value over time and which with any luck will actually appreciate in value". Instead, at least in this passage, he's thinking of an investment in much the same way as you might consider a dishwasher, or any other durable good, as an investment. You pay a sum of money up front, and then you get a stream of valuable services more or less in perpetuity. In the case of a dishwasher, that means clean dishes; in the case of a house, that means shelter in the place you want to live.
Read the full story at Reuters.