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WSJ: Is Your Home a Good Investment?

  • May 29th 2009

by Mark Wellborn

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WSJ: Is Your Home a Good Investment?: Figure 1

The Wall Street Journal’s Brett Arends had an interesting column recently about the long-term investment of real estate.

In short, he doesn’t think that it is the best investment that you can make. He argues that the annual rate of return is far smaller than people think once you take inflation into account. He analyzes the Case-Shiller home index for ten major cities and notes that the yearly return is normally in the low single digit percentages.

From his column:

“Conventional wisdom long held that home ownership was a route to wealth, and the imputed rent — in other words, the right to live in your home — was just part of the value you got from it. Under that widespread view, the recent housing bust was simply a temporary, though deep, pothole.

Yet for very many people, even over the past 15 or 20 years, the imputed rent may have been all, or nearly all, the real value they actually got from their home.”

Arends’ theory is certainly going against the grain, but he does back up his hypothesis with data. Do you agree with him?

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/wsj_is_your_home_a_good_investment/966.

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