Re:Why the government took home prices out of its main infla...
by onlyrealcuzzo on Friday May 27, 2022 @04:58PM
(#31534802)
Real estate is leveraged - often times in the US 33:1. Stocks aren't.
You also have to factor in that it's a hedge against inflation on rent, and that part of your rent payment is going to principal, and that your mortgage interest is tax deductible.
If you think the average return for the S&P 500 unleveraged beats owning a PRIMARY RESIDENCE on 5:1 leverage, when your marginal tax rate is 45%, and interest rates are 2.7% on a 30-year fixed... I guess time will tell, but it is INCREDIBLY unlikely.
Re:Why the government took home prices out of its main infla...
by throw0101a on Saturday May 28, 2022 @02:09PM
(#31542419)
> Real estate is leveraged […]. Stocks aren't.
Leveraging in stocks:
[citation needed]
Per the The Credit Suisse Global Investment Returns Yearbook 2018, the global return for real estate from 1900 to 2017 was 1.3%, while stocks returns 5.2%:
* https://www.credit-suisse.com/media/assets/corporate/docs/ab...
Rent is often cheaper than mortgage payments, and is very more often cheaper than mortgage payments plus the cost of maintaining a home. If you take the difference and investment you can have just as must equity in a few decades. Preet Banerjee goes over the math in this ten minute video:
* https://www.youtube.com/watch?v=KAMeI4uHAFE
He rents:
* https://www.speakers.ca/2013/10/preet-banerjee-sold-his-hous...
If you want to know when it makes financial sense, the "5% Rule" by Ben Felix is a decent place to start:
* https://www.youtube.com/watch?v=q9Golcxjpi8
* https://www.youtube.com/watch?v=Uwl3-jBNEd4
Until recently he was a renter, but purchased a house 1-2 years ago. Not exactly happy with the decision though:
* https://www.youtube.com/shorts/L5SAF0SHD1w