Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: river rat

A home bought for cash 28 years ago for $86K that sold for $1M on Friday would have returned an annualized 9.16%.

An identical amount invested in 1977 (6/17/77 at 99.97) in the S&P 500 index and sold on Friday (6/17/05 at 1216.96) would have returned an annualized 9.34%.

This doesn't take into account the impact of interest paid (or tax deduction thereof) on a loan or the massive impact of dividends paid and reinvested in the stock holding. Realtors cut isn't in there either.

9.16% is nothing to scoff at but isn't an astronomical number. Real estate returns often look more impressive because we start with and end with a large absolute dollar amount.

That being said, a situation like that doesn't look much like a bubble to me.


122 posted on 06/18/2005 8:25:36 PM PDT by HRoarke ("There cannot be an absence of moral content in American foreign policy,..We are not Europe")
[ Post Reply | Private Reply | To 5 | View Replies ]


To: HRoarke

It also doesn't account for the imputed tax free rent value of living in one's home. That is rather more valuable than the dividends paid.


123 posted on 06/18/2005 8:30:29 PM PDT by Torie (Constrain rogue state courts; repeal your state constitution)
[ Post Reply | Private Reply | To 122 | View Replies ]

To: HRoarke
A home bought for cash 28 years ago for $86K that sold for $1M on Friday would have returned an annualized 9.16%.

But you haven't included the cost of renting a residence for 28 years. That's a big part of the return.

124 posted on 06/18/2005 8:43:11 PM PDT by speekinout
[ Post Reply | Private Reply | To 122 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson