Are you buying a family house or a lottery ticket?

The same week legendary investor Warren Buffett put his California vacation house on the market, a friend told me that her widowed mother had sold the family home in Cleveland.

Buffett bought his Laguna Beach place in 1971 for $150,000 and is asking $11 million. My friend’s parents bought their home for $24,500 in 1965 and just sold it for $104,000. Put another way: If Buffett gets his asking price, his house will have appreciated at an annual rate of 9.79 percent. The Cleveland house eked out a 2.82 percent annual return.

Homes are a big part of most Americans’ net worth. But whether a home purchase pays off huge, or pays off at all, is largely a function of geography.

It means some people hit the real estate lottery, blessed with gobs of equity. Others can do everything right — buying homes they can afford and diligently paying down their mortgages — but have far less to show for their efforts.

The solution for most of us is to invest in stocks, which historically deliver better returns than other investments and which help you build wealth regardless of where you live.

On average, home prices nationally have barely kept up with inflation since 1900. Most of the nation’s housing wealth is concentrated in California, New York, Florida and Texas, according to an analysis by the Urban Institute.

Homes can offer tax breaks for mortgage interest, property taxes and capital gains, since the first $250,000 of home sale profit per owner typically is exempt from taxes. But homes also come with considerable costs that can’t be deducted, including insurance, maintenance, repairs and upgrades.

Stocks, by contrast, never need a new roof and outpace inflation over time by a fat margin. Theoretically, my friend’s mother would be more than half a million dollars richer today if she and her husband had invested their $5,000 down payment in the Standard & Poor’s 500 stocks instead.

Or consider what Buffett could have earned. A $150,000 investment in the S&P 500 in 1971 could have turned into almost $14.5 million — even more than the asking price on his six-bedroom, ocean-view house.

Without a crystal ball, people need to hedge their bets. Buying a home and paying down a mortgage can be a kind of forced savings that results in at least some equity, regardless of market conditions. But most people should be wary of advice that encourages them to “stretch” to buy a house or view their home as an investment.

“Buy your house for what you need for your family,” says certified financial planner Tim Obendorf of Chicago.

“Don’t count on your home appreciating 5 percent a year and being your retirement savings.”