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Why Land and Homes Actually Tend to be Disappointing Investments

18 July 2016
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18 July 2016, Comments: 0

Robert Shiller looks at real estate over the very long term and finds the returns disappointing:

Over the century from 1915 to 2015, though, the real value of American farmland (deflated by the Consumer Price Index) increased only 3.1 times, according to the Department of Agriculture. That comes to an average increase of only 1.1 percent a year — and with a growing population, that’s barely enough to keep per capita real land value unchanged.

According to my own data (relying on the S&P/Case-Shiller U.S. National Home Price Index, which I helped create), real home prices rose even more slowly over the same period — a total increase of 1.8 times, which comes to an average of only 0.6 percent a year.

What all that amounts to is that neither farmland nor housing has been a great place to invest money over the long term.

Read the whole story at The New York Times:
http://www.nytimes.com/2016/07/17/upshot/why-land-may-not-be-the-smartest-place-to-put-your-nest-egg.html?_r=0

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