WSJ: A Home Is a Lousy Investment

An analysis of home-price and ownership data for the last 30 years in California — the Golden State with notoriously golden property prices — indicates that the average single family house has never been a particularly stellar investment.

If a disciplined investor who might have considered purchasing that median-price California house in 1980 had opted instead to invest the 20% down payment of $19,910 and the normal homeownership expenses (above the cost of renting) over the years in the Dow Jones Industrial Index, the value of his portfolio in 2010 would have been $1,800,016.

The stocks would have been worth more than the house by $1,503,196.

If the analysis is based on 2007, the stock portfolio would have been worth $2,186,120, exceeding the house value by $1,625,850.

Full article < Worth reading

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Great Quote: The sanctity of mortgage obligations has become the rough moral equivalent of the 55-mile-per-hour speed limit.

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Ken’s Take: But, who put 20% down? Lots of upside potential with little downside risk if you don’t care about your credit rating … living in a house for free a couple years – while the bank tries to foreclose – offsets much of the difference .

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