Answer by ALLEX TABARROK, PROFESSOR OF ECONOMICS GEORGE MASON UNIVERSITY
Housing is overrated as a financial investment. First, it's not good to have a significant share of your wealth locked into single asset. Diversification is better and it is easier to diversify which stocks. Second, unless you are renting the basement houses don't pay dividends .stock do. You can hope that your house will accumulate in value but don't Count on it . Indeed ,as an investment your house will appreciate less then does the stock market . Home ownership locks people to location, making it harder to move for Jobs. The problem is specially severe because no one likes to sell at a loss even when it is a rational to do so . Also behavioral economics tells us that we quickly get usedto be houses but we never get used to community. So when you have a choice, go for the small house closer to work.
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