“In terms of total returns, residential real estate and equities have shown very similar and high real total gains, on average about 7% per year. Housing outperformed equity before WW2. Since WW2, equities have outperformed housing on average, but only at the cost of much higher volatility and higher synchronicity with the business cycle. The observation that housing returns are similar to equity returns, yet considerably less volatile, is puzzling.”

https://www.frbsf.org/wp-content/uploads/sites/4/wp2017-25.p...

The US was a brand new country that was mostly empty. Look at England for some historical data.

Ok but they also provided a link showing how this also applied in Amsterdam, in The Netherlands - a much older and less-empty country.

That link doesn't show that housing was not an investment for centuries, does it?

Why wouldn't you consider an investment something that has a relatively stable value in real terms - at least over a long enough period - and also provides a yield?

The link supports the statement "housing tracked inflation for 400 years". I think the confusion here is the word "investment" is overloaded and could refer to a number of different things regarding property:

- you buy the property that you personally will live in

- you buy some other property and let it out to tenants or businesses

- you are a pension fund, mutual fund, hedge fund, day trader, bank, HFT etc which trades in derivatives based on mortgages

The first two have been going on for centuries at some level. The third only really got going at the point house prices completely disconnected from inflation.

I agree. That's why the original statement "Housing was never an investment before recent decades" doesn't make a lot of sense and the justification "Housing tracked inflation for 400 years" doesn't support it even it's correct.

(Btw, not sure if it was implied but the "you" in "you buy some other property and let it out to tenants or businesses" is often a pension fund or mutual fund.)