Interesting - "Was my home a good investment?" Your home vs S&P500 calculator.

[LeeH]

Home Rate of Return Calculator: Was my home a good investment? - CNNMoney

Note that data is for the last day of the last month, so you have to set it to Nov. 2014.

What this doesn't take into account is the $15K kitchen remodel, $10K bathroom remodel, $10K pool/landscape remodel, or the new carpet, the new AC, the new water heater, garage door opener, custom bookshelves.... I think I'll stop now.

[KFC911]

This area was never a bubble although prices did take a hit when the RE bubble burst (since recovered). My primary house (I don't consider that an investment....gotta live somewhere) has appreciated at a VERY low/modest rate over 20+ years. My other houses were paid for in cash....taking profits from other investments (primarily equities) and putting in a "safe haven" (houses/land). I like a diversified mix of both and though I've never done a comparison....I'm sure my RE investments' rate-of-return is anemic by comparison. That's OK with me though....

[motion]

Fees, RE agents, escrow companies, etc. always get the lion's share of profits in residential investments.

[red-beard]

Do you get to live in the S&P 500? A home is not simply an investment.

If you purchased the home as an investment and RENTED it, you would also add an income stream to the investment.

At $200K, you might have rented it for $1200 per month. Assuming the rent went up with your assessed value, 75% over 15 years, the average collected rent would be $1650/month.

Also, you didn't "invest" $200K. You probably invested a maximum of $40K (20% down). If the S&P went up by a factor of 25 in the time period, then the value would be $1M. Compare that to the $150K gain on the value of the House.

Maybe that wouldn't make you feel any better...

[widebody911]

My house payment now is less than my rent was before I bought.

[imcarthur]

Thanks to the never-ending stream of Asian immigrants to Toronto . . .



Ian

[LeeH]

Originally Posted by red-beard

Also, you didn't "invest" $200K.

We did.

[Cajundaddy]

Yep, a pretty weak calculator. Home ownership is so much more than just an investment and I think diversification in stocks, bonds, RE, and cash results in the best investment outcome over time because it gives you choices within your control.

Originally Posted by LeeH

We did.

Now add the present value of the rent you would have paid over the same period for a similar property to get your effective appreciation in value. You did better than you think.

[KFC911]

Just ran the calculator on my primary house. 1.8% annual return over 22 years...fortunately I've done a bit better in other areas so no complaints here

[stomachmonkey]

It does not seem to factor for what you floated on the house or whether it was a 15 or 30 year note.

Lots missing.

[TheMentat]

Originally Posted by red-beard

Do you get to live in the S&P 500? A home is not simply an investment.

If you purchased the home as an investment and RENTED it, you would also add an income stream to the investment.

At $200K, you might have rented it for $1200 per month. Assuming the rent went up with your assessed value, 75% over 15 years, the average collected rent would be $1650/month.

Bingo...

if you factor in the rent you earned on the house (or would otherwise have to spend) assuming an average monthly of 1650/month, your annualized return is almost 12%!

That calculator is pretty misleading...

[GH85Carrera]

No doubt I could live in a smaller cheaper place but and have less stuff and have more money invested. I don't see that as a smart thing to do. I like my house and my stuff. It is all paid for and I still have some money invested. My house is way more than just an investment.

[Neilk]

Live in Texas, then knock off about 1.8% per year on the assessed value of the house for property taxes. After Federal deductions etc, it might end up being a bit less, but it is quite significant.

[look 171]

Originally Posted by imcarthur

Thanks to the never-ending stream of Asian immigrants to large cities in N America with big bucks.



Ian

fixed it for you

[on2wheels52]

I bought one because I didn't want to be a homeless person
Jim

[fintstone]

I bought my first house for zero down at $69,900. Closing costs were about $3K. It has been rented every day since 1985. It was a wash for the first 10 years (paid off mortgage) and averaged a net return of about $10K per year for the last 20 years...or about $200K It is worth around $200K now...ao, about $400K return over 30 years on a $3K investment. What is that, around a simple 16.5% annual return and almost an 8000% total return if you don't count interest/earnings I could have earned on the $10K per year for the last 20 years if I invested it in the S&P or another house?

[dedbird]

That is a ridiculous comparison. You would need to factor in how much you would pay for rent, mortgage interest deduction benefits, tax benefits of sales of real estate vs. capital gains taxes on stocks, ($500k tax free on the sale of the primary), etc.

[Z-man]

Interesting -- just sold my home in September, after living there since 1991.

The data portion doesn't go back that far, but it states my annual return was 3.2%, with a total return of 109.5%.

I did sell the house for more than double what I bought it for, but did a lot of improvements on it over the years.

-Z

[KFC911]

Originally Posted by dedbird

That is a ridiculous comparison. You would need to factor in .....

I think we all get that...and thus don't take it too seriously. There is no "return" that I would exchange for the peace-of-mind of being debt free for a pretty long time now. Of course I've missed out on "higher returns" sometimes....but that just doesn't bother me one bit....YMMV.

[aigel]

This comparison implies that you would buy a house as an alternative to stocks or vice versa. You want to be diversified - a tangible asset like a home is a very good idea if it isn't the only thing you invest in.

G