After the recent housing market crash, I have mixed feelings on considering your home an "asset", so I'm curious about how others feel about this. While I get all of the uproar about the folks that bought a home & considered it an investment that could be used for quick profit, I'm not sure I agree with the follow-on philosophy that your house is a bad investment.
Certainly, it could be a bad investment, but it's also possible that the house you purchase will go up modestly (or more) in value, and upon retirement will be worth a chunk of change.
In our situation, when we retire, we will have two paid off properties that are worth more than they are now. We will likely sell our current residence and keep the vacation house. We may live there permanently, or we may split our time between that home & a sunnier weather destination. Either way, selling our current residence should yield us an enormous sum (factoring in even the most conservative growth - $1.5 million). We are definitely paying for the privilege of living there (via keeping current on updates + mortgage/interest), but we would be paying to live somewhere, regardless of if we owned or rented. We will want a smaller place when we're ready for retirement, and good schools will no longer be at the forefront of our minds, so we'll sell and move somewhere that requires much less maintenance. Moving to a paid off second residence will certainly keep our retirement housing costs in check.
We consciously chose to live in a great neighborhood with excellent schools, but we also purchased one of the worst houses in the neighborhood. We've slowly been upgrading it, as finances allow.
We love where we live & feel like this was the right choice for us, but by no means do I think the way we handled it is the *only* way to go. Real estate is our biggest splurge - we own two homes & if M has his way, we will likely by a 3rd home in the next 5-10 years. After we have our 401K loans paid off & can afford to put 20% down. We will take the money we are currently paying for childcare, and devote that toward a third home. We shall see. What are your thoughts on real estate? Something you splurge on? Scrimp on? Don't consider an investment? No right or wrong answers, just curious how others approach this enormous expense. When you consider your retirement, do you plan to live in your paid off home? Sell it? Move somewhere smaller, or in a lower cost of living area? Does that factor into your retirement planning?