The Personal Finance Podcast

Episode: Buying a House VS. Investing In the S&P 500 (Which Is Better?)
Host: Andrew Giancola
Release Date: December 3, 2025

Overview: The Great Wealth-Building Showdown

This episode tackles the time-honored debate: Is it financially smarter to buy a home or to invest in the S&P 500? Host Andrew Giancola breaks down returns, costs, and behavioral misconceptions, ultimately arguing that buying a primary residence is a lifestyle choice—not an investment. The episode features deep dives into historical returns, itemized homeownership costs, practical case studies, and when homeownership makes sense for reasons other than wealth-building.

Key Discussion Points & Insights

1. Historical Returns: Housing vs. S&P 500

[03:05-07:30]

• Andrew sets the stage by referencing a viral chart illustrating the disparity between the two assets since 1970:
  • Buying a house (as a residence): ~400% total return since 1970
  • Investing in the S&P 500: ~7,000% total return over the same period
• Real estate provides a nominal annual return of ~3.5% (pre-inflation), but real appreciation (after inflation) is only 0.6% per year over 100 years.
  • “You get more than that currently in a high yield savings account in most situations.” (Andrew, 07:19)
• By contrast, the S&P 500, with dividends reinvested, averages 10.5–11.5% annual nominal return, and 7–8% after inflation.

2. The True Nature of Homeownership

[07:31-12:05]

• Andrew strongly distinguishes between buying a home to live in vs. real estate investing for income.
• “Buying a house is a lifestyle decision more so than it is actually an investment decision.” (Andrew, 04:39)
• The average person significantly underestimates the total costs and opportunity costs associated with owning a home.

3. Total Cost of Homeownership Breakdown

[13:15-24:30]

• Andrew unpacks the “invisible” and visible costs of homeownership:
  • Mortgage Interest: Especially front-loaded in the early years. On a 30-year mortgage, 50-70% of payments can be interest.
  • Property Taxes: Ongoing, even if the home is paid off. Average ~1.1% of home value per year, but varies by location.
  • Maintenance & Repairs: Minimum of 1% of home value per year (can be up to 3%). Includes big-ticket items like roofs or HVACs.
  • Insurance: Essential, especially in disaster-prone areas.
  • Utilities/HOA: Often higher for homeowners, especially in bigger homes or HOA neighborhoods.
  • Closing Costs: 2–5% to buy; 6–10% to sell (agent commissions, prepping home for sale, etc.).
  • Renovations: Rarely recoup full cost. Kitchens/bathrooms may not add value long-term due to style shifts and wear.
  • Regular Maintenance: Lawn care, pool maintenance, cleaning—time and money.
  • Opportunity Cost: Money spent on the above can’t be invested in higher-ROI vehicles like stocks.
• “Every little thing that needs fixed is your responsibility. And so all of those maintenance items that we're talking about here have an opportunity cost.” (Andrew, 23:05)

4. Case Studies: Numbers That Tell the Real Story

[25:18-37:30]

Case Study 1: $300,000 Home

• Down payment: $60,000 (20%)
• Mortgage at 6%, insurance, taxes, maintenance, etc.
• True total out-of-pocket over 30 years: $560,000–$600,000
• Home's estimated value after 30 years: $500,000–$550,000
• Versus investing the $60,000 down payment and $400/month cost difference:
  • Invested at 10%: ~$1.8 million
• “Stocks are beating housing by 1.3 to 1.4 million on a $300,000 house.” (Andrew, 28:53)

Case Study 2: $500,000 Home

• Down payment: $100,000
• 30-year cost (interest, taxes, maintenance, etc.): $880,000–$1 million
• Estimated home value after 30 years: $800,000–$900,000
• If invested instead:
  • Down payment ($100K) at 10% = $1.7M
  • $600/month “extra” = $1.25M
  • Total: ~$2M above home appreciation
• “Stocks would beat the value of your home by $2 million if you compare the two. That is absolutely crazy.” (Andrew, 31:45)

Case Study 3: $1,000,000 Home

• Down payment: $200,000
• 30-year costs: $1.6M–$1.9M
• Home's value after 30 years: ~$1.6M (real terms)
• If invested in S&P 500:
  • $200,000 at 10%: $3.5M
  • $2,000–$2,500/month delta: $5.2M
  • Total: $8.7M, or $7M more than the home’s value
• “Even when I ran these numbers, I was shocked. It is a shocking difference.” (Andrew, 35:54)

5. Why People Think Homes Are a Great Investment

[37:32-39:05]

• Behavioral finance: Nominal gains “feel big”.
• “Oh, I just bought a $300,000 home. It went up to 700,000, I made $400,000!” (Andrew, 37:40)
• Failure to account for inflation, costs, and opportunity cost.
• Media hype and the “leverage illusion” — the ability to control a large asset with a smaller down payment.

6. When Does Homeownership Make Sense?

[38:00-39:00]

• Stability: Wanting a consistent place to live long term.
• Lifestyle/emotional value: School districts, proximity to family, ability to customize home, planting roots.
• Forced Savings: Mortgage is a “forced” way for non-savers to build equity.
• Protection from rent increases
• Inflation hedge: Home values tend to track inflation (not outperform it).
• “It's a lifestyle reason, not a financial reason.” (Andrew, 37:58)

Notable Quotes & Memorable Moments

• “Buying a house is a lifestyle decision more so than it is actually an investment decision.”
  — Andrew Giancola [04:39]

• "The S&P 500...has returned 70 times your money in the same exact timeframe. Now that's before we even talk about property taxes and insurance and HOA fees and maintenance fees and all the other fees associated with owning a house.”
  — Andrew Giancola [05:37]

• “Opportunity cost is a real thing. And when you factor in opportunity cost in addition to all these other numbers we talked about, that is where you'll see a huge, huge difference.”
  — Andrew Giancola [38:48]

Timestamps for Important Segments

| Segment | Timestamp | |-----------------------------------------|--------------| | Opening and Main Theme | 01:53-03:05 | | Historical Return: Housing vs. S&P 500 | 03:05-07:30 | | The True Nature of Homeownership | 07:31-12:05 | | Homeownership Costs Breakdown | 13:15-24:30 | | Case Study 1: $300k Home | 25:18-28:53 | | Case Study 2: $500k Home | 29:00-31:45 | | Case Study 3: $1M Home | 34:30-35:55 | | Common Misconceptions | 37:32-39:05 | | When Homeownership Makes Sense | 38:00-39:00 |

Conclusion: The Takeaway

Andrew reinforces that, from a math and wealth-building standpoint, investing in the S&P 500 has vastly outpaced buying a primary residence—especially after factoring in all hidden and opportunity costs. Homeownership can be a great choice for stability, family, and lifestyle, but should not be confused with a high-yield investment strategy.

Action step: Andrew recommends using his “Total Cost of Ownership Calculator” (linked in the show notes) before making any home buying decisions, so listeners can evaluate rentals vs. owning vs. investing with accurate, personalized numbers.

For those seeking financial independence and maximum wealth growth, the numbers strongly favor stock market investing—while homeownership is best reserved for those seeking lifestyle and emotional rewards.