Intel Co-Founder’s Silicon Valley Estate Lists for $21.8M
wsj.com
wsj.com
So about 7.5% per year in appreciation over 19 years.
Really good rate of return but not the eye popping numbers you expect to hear from the heart of Silicon Valley.
Mostly it was in the band of 6-8%. This is less than S&P 500 and considering the mortgage rate was >6% before 2006 its not much. One exception to this is properties bought in the 2008 recession which had 12-18% CAGR.
I'm not sure I understand all the comments comparing this RoR to the S&P or some other benchmark. S&P stocks are highly liquid, so the price you see is the actual price you can get at any given moment. Not so with housing. The actual selling price could be higher or much lower depending on who is ready, willing and able to make this purchase in the next few months.
Consider 2000 years ago people where producing beef. At 2% economic growth we would be producing 1.5 * 10^ 17 cows or something of equivalent value.
Further, many areas like Detroit have seen a reduction in land values over significant time periods.
The bottom line is that for most of modern history, real estate as a whole has been a better investment than some theoretical instrument that tracks inflation.
Your point about Detroit is like arguing that stocks are a bad investment because Enron collapsed.
As to land look up an acre of Iowa farmland. It’s not worth that much in comparison to a an acre near a city. But to see that growth you need to predict were massive migration and infrastructure investments take place while subtracting taxes.
https://www.extension.iastate.edu/agdm/wholefarm/html/images...
But to your broader point, predicting where growth will occur, is literally the definition of investing. Investment is the allocation of capital towards areas of growth. Luckily, the global economy has generally grown over time, which means that generally investments such as real estate tend to grow as well, and faster than inflation.
I’ve gotta say, I appreciate your thoughts and perspective, but you’re going to miss out on a lot of growth if you only believe in investing in utilities companies and TIPS.
PS: I chose farm land specifically because it’s value relates to it’s use as a productive asset. In Gerlach, Nevada you can get land as cheap as $157 per acre. Now, if we start running out of space for solar panels it might be worth something some day but for now it’s really not.
In the short term, like my lifetime, growth stocks are great. But, you need dividends at some point or what does stock ownership actually provide?
https://dqydj.com/sp-500-return-calculator/
Annualized S&P 500 Return (Dividends Reinvested) 6.141%
> She called the French-style home “nice but not ostentatious,”
> The property also contains a three-bedroom guesthouse, a grotto-style swimming pool, a lighted tennis court, a putting green, a bocce court, a barn and a vineyard.
> Ostentatious: characterized by vulgar or pretentious display; designed to impress or attract notice
If you want to see some ostentatious houses, check out the McMansion Hell blog.
Seems like a mansion to me.