What is the break even point on a house?

[rose-colored-coolaid]

We've seen a lot of talk lately on jingle mail and the such. Usually this is in regard to a house which is already underwater. But what about a house which is not technically underwater, but will also not break even in a transaction.

Let me preface this with how the average joe calculates gains and loses. Let's say AJ (average joe) buys a baseball card for $50. He pays $4.50 in tax, and some minimal amount in storage (needs a bigger closet for his cards, which means a bigger house, which means a bigger rent/mortgage). Over the course of the next 5 years, baseball card demand drops, and then recovers somewhat. At the end of 5 years, AJ sells his card for $55 on ebay. He comes up with the shipping costs of $2, and he loses another 1.5% or 75 cents on escrow services (paypal).

Add it all up, and he has lost money (not counting inflation), but when he talks to his friends he tells them how he made $5 on the deal.

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I know it's impossible to conclude what is an average home ownership. But if you consider all the things people do, what kind of positive growth does it actually take to come out ahead? Let's say AJ buys in 2004 for $300k, refis in 2007, and sells in 2009. He pays his taxes, makes his repairs, and even upgrades the kitchen (or something). He drops a ton of money on interest payments (tax break..YAY!). When he sells, he incures the standard 6% in transactional loses.

How much does AJ need to sell for to come out financially even on this transaction (ignore cost of comparable rent this time).

My guestimate is that he needs to sell for close to $400k after 5 years to truly break even on this one transaction taken in isolation. Maybe I'll crunch some numbers when I have some more free time.