How Has Your Investment Grown On A National Level vs. the S&P 500?
HOME OWNERSHIP RETURNS VERSUS S&P 500
Assuming 20 Percent Down Payment on a $250,000 Home
|
Home Appreciation |
Capital Gain |
Leveraged Return (%) |
S & P (%) |
1988 |
4.2 |
$10,500 |
21 |
16.6 |
1989 |
0.2 |
500 |
1 |
31.7 |
1990 |
2.7 |
6,750 |
14 |
-3.1 |
1991 |
5.4 |
13,500 |
27 |
30.5 |
1992 |
3.0 |
7,500 |
15 |
7.6 |
1993 |
3.0 |
7,500 |
15 |
10.1 |
1994 |
4.1 |
10,250 |
21 |
1.3 |
1995 |
2.7 |
6,750 |
14 |
37.6 |
1996 |
5.2 |
13,000 |
26 |
23.0 |
1997 |
5.1 |
12,750 |
26 |
33.4 |
1998 |
5.4 |
13,500 |
27 |
28.6 |
1999 |
3.9 |
9,750 |
20 |
21.0 |
2000 |
4.1 |
10,250 |
21 |
-9.1 |
2001 |
5.8 |
14,500 |
29 |
-11.9 |
2002 |
7.5 |
18,750 |
38 |
-22.1 |
2003 |
7.6 |
19,000 |
38 |
28.7 |
Annual Avg. |
4.4 |
$10,922 |
22.1 |
13.9 |
Real Estate will always outperform all other investments over a long enough time. The reason is simple. We have the use of leverage on our side. Even with ridiculously low appreciation on a national level real estate will always outperform investments in the stock market. Of course, you could cite a few examples like: what if you founded Microsoft, Apple, IBM, Oracle, as an angel investor? The reality is these successes are limited to a very few people.
But consider what the people do who did accomplish such goals? They all invested the cash from the sale of their stocks into real estate. At his current rate Paul Allen of Microsoft may own the majority of the State of Washington soon. It is written that 98% of all the wealth in America is in the capital. Our land is our asset! Not our currency, not our stock market but the land we own!
