Wondering if you should keep the house?

I have always heard that a house is an appreciating asset and certainly, in some parts of the country that was true a couple years ago. Now however, houses are acting like other investments in that they can go down as well as up. However, a recent article in the Wall Street Journal (see Dump This House: Unloading Your Property in a Slow Market November 7, 2007; Page D1), suggests that most of us tend to ignore some costs (such as opportunity costs) when reaching a decision.

Given the fact that we are going fulltime in the RV next month, I wanted to evaluate the cost of holding a house in the same way I would evaluate the costs of other investments.

I wondered how much a home really costs when taking costs such as insurance, maintenance, and other costs into account. I also wanted to compute the opportunity costs involved in having equity in the house that was not invested in something providing a return (other than possible house appreciation). To try and get a handle on this, I created the spreadsheet linked here. You can enter in your own values and the sheet will compute the annual, 5 and 10 year costs of holding the home.

Calculating the cost of holding a house

Please note that I do include home appreciation (I used 3% a year as this has been a reasonable long term average in our area -- enter your own figure). Also, I did not consider tax impacts since this is different between each person. Feel free to adjust the spreadsheet for your specific needs.

Let me know how it works for you. -- Rick Christoph

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