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.
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.