At the most basic level, a home is a capital good that “produces” a continual flow of housing services. This continual flow of housing services is quite valuable. You can even sell it off in chunks to other people. That is, after all, how landlords make their money.

When you own a home that you also live in, the flow of housing services that the home produces comes back to you free of charge. People don’t often think of this as a return on the home investment because, unlike a landlord-tenant arrangement, no monthly rental money is changing hands. But it is a real financial return nonetheless. You are your own landlord and you are pocketing the rental value of the home every month.

This can be a little tricky to comprehend. Think about it like this: If you didn’t own a home, you would be paying rent — but to someone else. When you own a home, imagine that you are still paying rent — but to yourself.