More like 7.5% and considering the house is heavily leveraged, it represents a great return on investment. Anyone getting 7.5% appreciation on their house is living there for free.
What's your math on that? 6% for 8 years is 1.06^8 = 1.593, which is about a 60% gain. If you are highly leveraged and paying 6% on the money you borrowed then 6% appreciation isn't a gain.
No, it is 6.0% Do the math. 60/8=7.5. That doesn’t account for ammortization. That is just a straight average ration. Start with $100,000. Compound that 6.0% annually and you get $159,000.
6.0% is correct.
By the time all is said and done, the numbers will work out to 4-5% because house prices over the long term never goes up faster than inflation. I’m willing to concede that inflatio may have been 5% since 2000, so that is a reasonable bottom for housing.
The problem is, after a bubble (and espacially a MASSIVE bubble like this last one), housing always dips below the mean in an over-reaction, before it comes back up to the mean. So at its worst, houing my dip down to a 3-4% annual rate of appreciation since 2000 before it stabilizes at 4-5%.