In a good article in the NY Times last Friday, the authors illuminate that although housing prices have done will recently, over longer term time periods, the equity markets have been significantly better. "In the Long Run, Sleep at Home and Invest in the Stock Market".
Since 1980, the average annual return for the S&P 500 is +10.2%...compared to a +7.7% rise in housing prices in New York, or a +6.7% increase in Los Angeles.
However, many investors are completely fixated on the returns of the past five years. While the S&P 500 is down 2.7%...housing prices are up 12% and 15.5%, in New York and Los Angeles, respectively.
Yet, when comparing the returns of equities to housing prices, it is often an apples and oranges comparison.Stocks are more volatile, and their price changes can be viewed daily. Moreover, real estate is typically a leveraged investment...which means that the effect of real estate's recent upturn, has been exacerbated.
The other obvious difference is that, if housing prices soften, you'll still have a roof overhead. One can't live in their portfolio.
Doubt is the key to knowledge.
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Posted by: Ed Hardy Online | July 11, 2011 at 11:48 PM
A man is only as good as what he loves.
Posted by: Jordan Max Fusion | July 11, 2011 at 11:50 PM
A man can fail many times, but he isn't a failure until he begins to blame somebody else.
Posted by: Onitsuka Tiger on sale | January 16, 2012 at 07:59 PM