Housing > stock market
https://www.redfin.com/CA/Fremont/43577-Southerland-Way-94539/home/643830 Dec 2016: bought for $1.7M April 2024: sold for $3M That’s a gain of 1.35M in under 8 years. That’s not possible in the stock market because real estate gives you the crazy leverage with mortgages. Congrats to the seller, absolute bandit.
Redfin
The buyer won’t be lucky for next 10 -15 years
Yeah I’ve gained almost half my net worth this way. Bought in 2021 when I was 21 for $265k @ 2.7%. Now worth $400k so I have a ton of equity at a young age and a super low mortgage.
can not be replicated now at 7-8% rates because the holding costs make it a poor choice vs other investments
@Amazon no shit
Oh damn who knew we weren’t allowed to use leverage on stonks
good lord this is fremont
Literally used the first compound interest calculator on Google search and an initial investment of 1.7 shows me a return of 3.5 for an 8 percent growth rate. Stocks would have given this person more. Assuming that the buyer paid everything down. If he paid interest on the home loan, then the difference is even less. Also, the growth rate for stocks during these years has been significantly higher than just 8 percent. I’m not sure where you did your math.
That's only in bulls market ?
Why would you assume a bear’s market when there has been consistent growth YOY in highly indexed funds ? There could be bearish moments but overall growth has always been net positive over a prolonged period.
You don’t know how much the seller put in the house. They could have done 500K in upgrades 🤷🏽♂️
Also add the 175K they paid to the agent that sold it.
And the property taxes, yearly maintenance etc.
Broadcom, Tesla, and Nvidia have entered the chat
Add on to this I can buy or sell stocks at any time I please, with no significant other effect on my life. Buying a house is a huge operation, selling a house is a huge operation, they're both all or nothing things, and finally (this is the one people really overlook) you can only really enjoy the appreciation of your house if you're willing to move to a totally new area. If this seller wants to stay in Fremont, guess what, their new house will have appreciated already as well and they'll be paying those higher prices.
You could have had a margin loan on tech stocks with similar returns. In reality, Bay Area housing is just an alternative tracking index for the tech market. A mortgage is just a margin loan on real estate instead of stonks.
Housing tend to be less risky though. There is a chance that you get a margin loan to buy stocks and be negative, but this probability is much lower with the housing market.
Not sure that’s the case, that’s exactly what happened in 2008. If these high interest rates persist and layoffs continue that could be a possibility again.