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If this is true, why is the return on owning land not better than the return on the stock market, at least in the estimation of most economists? Unless you have
by savanaly 9y ago
If this is true, why is the return on owning land not better than the return on the stock market, at least in the estimation of most economists? Unless you have some comparative advantage in owning/administering to land, it's not actually such a sweet deal relative to normal investing.
Owning land is "free money" in that you tie up your wealth and in exchange get interest. Same deal with owning stocks. Land isn't special, nor is it really helpful to view it as a "redistribution of wealth upwards" in my opinion.
- sp332 9y agohttp://www.investopedia.com/ask/answers/060415/what-average-annual-return-typical-long-term-investment-real-estate-sector.asp http://www.investopedia.com/ask/answers/060415/what-average-... "By any measurement, the real estate sector has outperformed the overall market, even factoring in the drastic collapse in housing prices during the 2008 financial crisis." (I'm not an expert but I recall hearing that much of the recovery from the recession went to real estate owners.)
- savanaly 9y agoGranted, every investment vehicle under the sun will have its ups and downs. It's a plausible case that real estate is worth having for its purported counter cyclical properties in some sort of advanced and complicated investment portfolio. From none of that does it follow that owning real estate is some sort of reverse scam where the owners are reaping incredible and reliable riches off the backs of the poor renters as the person I was replying to implied.
- mistermann 9y agoBecause this truism is based on a long period of history, whereas real estate blowing most every other investment out of the water especially when you consider you're usually working on 90% leverage, is a relatively recent phenomenon. I continue to be of the opinion that a major driver of this is the rise of China.