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In a world of zoning and NIMBYs I very much doubt the market adjusts in any way that resembles an efficient market. At most the portion of the rent I get from
by TimPC 4y ago
In a world of zoning and NIMBYs I very much doubt the market adjusts in any way that resembles an efficient market.
At most the portion of the rent I get from my capital is the difference between deploying the capital in the market and the return to housing. Since housing has historically beat the market that suggests a zero or negative rent for investing in housing.
- chii 4y ago> Since housing has historically beat the market this is not true unless you only start counting from the past 10-20 years, and only include regions that _did_ beat the market, rather than globally. see https://www.youtube.com/watch?v=7rvY2rIxdsA https://www.youtube.com/watch?v=7rvY2rIxdsA
- TimPC 4y agoIf you measure the capital returns of housing as buying a property and letting it sit empty it doesn't beat the market. But renting a property returns roughly 6% of capital in most markets, and Canada-wide housing prices have gone up 7.5% a year over the last 20 years. Even if it costs you 2.5% of the home price to rent the property (this is a high estimate) that suggests making 11%/year over the last 20 years. If you go back longer, the capital curve for housing gets slightly lower and you might eventually get only 9% returns counting capital income and rental income. But markets still haven't returned 9%/year.