Re:Why the government took home prices out of its main infla...
by TimPC on Saturday May 28, 2022 @03:58PM
(#31543251)
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.
Re:Why the government took home prices out of its main infla...
by chii on Saturday May 28, 2022 @11:16PM
(#31546021)
> 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.
Re:Why the government took home prices out of its main infla...
by TimPC on Tuesday May 31, 2022 @01:44PM
(#31572493)
If 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.
no, if you paid off the mortgage, then the cost of your "rent" is just the cost of the capital sitting in the house (plus those maintenance costs you mentioned).
There's no such thing as free living. it is possible that rent is more expensive - but over time, this ought to normalize, as expensive rent will incentivize build-to-rent and arbitrage the difference to make a profit.