4 ms·

I think you are more than exaggerating. Thinking of someone who's 65 now and owns several homes, these people are utter fools. How much would money put into ho

I think you are more than exaggerating. Thinking of someone who's 65 now and owns several homes, these people are utter fools. How much would money put into houses 40 years ago when they bought, and put into stocks at the same time, would make? You don't even need to google up to know the answer. SP500 would make 96x with dividends reinvested and 37x without. Median home price is not even 10x, and the median home has increased in size 1.5x in the meantime, plus required upkeep. Fix to housing problem is nothing but financial education for people.

deleted 4y ago
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Applejinx 4y ago
Why should stocks be an asset class guaranteed to always expand at such a hyperbolic rate?
- pharmakom 4y ago
  No guarantees, but stocks capture the value of technological innovation that housing (expect a few markets like SF) does not.
bushbaba 4y ago
You forget that 1) you only have 20% down for a home. 2) homes can be sold without tax implications. If housing had the same tax treatment as stocks it’d be a horrible investment.
mrep 4y ago
Actually, you do need to google up if you want to look at an actual data analysis. I mean, you aren't even counting the rental income in your comparison. If you look at the rate of return on everything from 1870-2015, equity markets and housing actually provide somewhat similar returns [0]. Equity markets are far more liquid though so I choose them personally. [0]: https://news.ycombinator.com/item?id=19817584 https://news.ycombinator.com/item?id=19817584
- nostrademons 4y ago
  The equivalent to rental income is "with dividends reinvested". Dividends are the cash flows from owning a stock, just like rent is the cash flow from housing. So the 10x capital appreciation from housing is equivalent to the 37x capital appreciation from the S&P 500. You and anovikov reach different conclusions because you're looking at different time scales. You're citing returns from 1870-2015; he's citing returns for the last 40 years, 1980-2020. The comment and paper you linked itself explains why: housing and equity returns were very comparable from the period 1870-1945, but equities significantly outperformed from 1945-present. I would bet on suburbanization as the cause: the U.S. embarked on a massive homebuilding project from 1945-2000, which kept supply high and prices relatively low during that period. Returns to housing since 2009 (when the bottom fell out of the homebuilding market) have much more closely matched equities.
  - anovikov 4y ago
    OK, so returns from 1870 to 2015 are same for housing and stocks. Which again proves that there's nothing morally wrong about housing prices, if these investments are replaceable, one can always invest in stocks to save up to buy housing (at least on average, that is).
    - namlem 4y ago
      On the contrary, housing shouldn't appreciate. It's bad for the economy as a whole, and especially for young people, for homes to be an appreciating asset. Housing should be a commodity, not an investment.
      - mrep 4y ago
        Housing doesn't have to appreciate to be an investment though because you still have rental income.

deleted 4y ago

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Applejinx 4y ago

Why should stocks be an asset class guaranteed to always expand at such a hyperbolic rate?

pharmakom 4y ago
No guarantees, but stocks capture the value of technological innovation that housing (expect a few markets like SF) does not.

bushbaba 4y ago

You forget that 1) you only have 20% down for a home. 2) homes can be sold without tax implications. If housing had the same tax treatment as stocks it’d be a horrible investment.

mrep 4y ago

Actually, you do need to google up if you want to look at an actual data analysis. I mean, you aren't even counting the rental income in your comparison. If you look at the rate of return on everything from 1870-2015, equity markets and housing actually provide somewhat similar returns [0]. Equity markets are far more liquid though so I choose them personally. [0]: https://news.ycombinator.com/item?id=19817584 https://news.ycombinator.com/item?id=19817584

nostrademons 4y ago
The equivalent to rental income is "with dividends reinvested". Dividends are the cash flows from owning a stock, just like rent is the cash flow from housing. So the 10x capital appreciation from housing is equivalent to the 37x capital appreciation from the S&P 500. You and anovikov reach different conclusions because you're looking at different time scales. You're citing returns from 1870-2015; he's citing returns for the last 40 years, 1980-2020. The comment and paper you linked itself explains why: housing and equity returns were very comparable from the period 1870-1945, but equities significantly outperformed from 1945-present. I would bet on suburbanization as the cause: the U.S. embarked on a massive homebuilding project from 1945-2000, which kept supply high and prices relatively low during that period. Returns to housing since 2009 (when the bottom fell out of the homebuilding market) have much more closely matched equities.
- anovikov 4y ago
  OK, so returns from 1870 to 2015 are same for housing and stocks. Which again proves that there's nothing morally wrong about housing prices, if these investments are replaceable, one can always invest in stocks to save up to buy housing (at least on average, that is).
  - namlem 4y ago
    On the contrary, housing shouldn't appreciate. It's bad for the economy as a whole, and especially for young people, for homes to be an appreciating asset. Housing should be a commodity, not an investment.
    - mrep 4y ago
      Housing doesn't have to appreciate to be an investment though because you still have rental income.