ROI on Homes is Zilch Over Past 35 Years
Comment: Sobering news. Just in case you missed the point from the past: a home is not an investment...
Even though the real rate of return of the U.S. national house price index was 1.3% from 1975 to 2009, the real rate of return on a typical home was below zero (–0.575%) over that period. That's assuming a 2.5% annual depreciation rate, a 1.5% property-tax rate, a 7% mortgage interest rate, and a 25% marginal income tax rate, according to Wenli Li and Fang Yang, writing in the Federal Reserve Bank of Philadelphia Business Review and quoted in Monthly Labor Review. "The case for trying to achieve a nation of homeowners needs to be rethought," the authors say.