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That's only a 4.5% rate of growth over 10 years. And that's boosted heavily by the incredible fortune of having bought at the low point. If they financed at 3%,

That's only a 4.5% rate of growth over 10 years. And that's boosted heavily by the incredible fortune of having bought at the low point. If they financed at 3%, they only made a 1.5% return on their money. If your parents had put that same money in the stock market, they would have made something like a 7% return and have well over $1.4mm — or possibly much, much more depending on the exact timing. They could easily have afforded $3,000/mo or more of rent (in the 2007 market) — assuming they financed the house — and still come out well ahead. Especially when you throw in insurance, maintenance, etc.

dvt 9y ago
They actually got it in 2011, my mistake. Had to double-check.
candiodari 9y ago
Sure, but it's probably boosted by the 10x leverage that mortgages allow. Let's say it cost $1M with $100k money down, interest-only loan. You get the 1.5% on the $1M, not on the $100k. So if you measure it like that you get $15000 interest on $100k, so in reality this is a 15% per year return, not a 1.5% return. Works the same in reverse when house prices go down, of course.