Did you buy your home expecting to make a gain on your sale, like, above what you’d make if you invested in the stock market?
I don’t know. Maybe in this day and age, but to me, all I expect is to live in it for thirty years, sell it, and get the cash I’ve invested back (minus all the interest I’ve paid, of course). That’s about all I expect.
According to the study, home values underperformed stocks and bonds over every five- and 10-year period from 1963 to 2005. Home values have been slightly above the returns on treasury bills during the same time, according to the report, “The Equity You Live In: The Home as a Retirement Savings and Income Option.”
Over the more than 40-year period, real compound returns on stocks outpaced that of residential real estate, according to the study, with 5.95% average annual returns on stocks compared with 1.35% in realty. A dollar invested in stocks in 1963 would have compounded to $12.36 by 2006, while the same dollar would have grown to $1.79 in real estate.
Of course, there is probably no other investment you’ll own where you’re going to get a big $300,000 – $1,000,000 check thirty years from now. Maybe it’s better to consider your home an “investment” like many do their federal income tax refund. Yes, it was all your own money to begin with, but you’re still happy to get it all at once, when you get it.
Source: Report Finds Home Values Underperform Other Assets – By Amy Hoak, MarketWatch.com