Aug 17, 2017.
Not much leverage, just save or bet it. $100k invested in Jan 2010 in housing will not grow as much, unless you add more to it.
Same plot as shown before (Aug 14, 2017) but updated for different approaches for investing in housing. When invested in S&P Index fund, this time period resulted in the best returns. If you paid the full mortgage on a $500k house with 20% down payment on a 30-year mortgage@4%, your monthly contribution will give a nice bump to the equity. However, if every month you only pay the interest, the growth is about 50%, same as if you bought a house worth $100k in cash. Inflation on the cash in bank will reduce the worth by about 12%. Therefore, the so called ‘leverage’ effect is not significant & most of the gains are due to monthly payment towards the mortgage.
Sources: Same as before (Aug 14, 2017) (monthly S&P and CPI data taken from Prof. Shiller’s page; housing data taken for Washington county (zip 97124) from Zillow). The interest rates were calculated using www.calculator.net. No fees or other charges are included. Also, no property tax or tax benefits included for simplicity.
Previous charts-of-the-day:
Aug 17, 2017 – Worth of money in parallel worlds (with housing leverage), $100k from Jan 2010 to Jun 2017
Aug 16, 2017 – no chart
Aug 15, 2017 – Worth of money in parallel worlds (long term trend), starting with $100k in Jun 1996
Aug 14, 2017 – Worth of money in parallel worlds, value of $100k invested in Jan 2010 worth in Jun 2017
Aug 13, 2017 – US consumer price index (cost-of-living index or inflation) – (2007-2017)
Aug 12, 2017 – US unemployment rate & wage growth (2010-2017)
Aug 11, 2017 – US home price change by state (1976-2017 & 2016-2017)
Aug 10, 2017 – Inflation plotted with US Treasury & Mortgage rates (2010-2016)
Aug 9, 2017 – US Treasury and Mortgage rates (2010-2016)
Aug 8, 2017 – Household credit score versus time (2001-2016)
Aug 7, 2017 – Monthly mortgage payment across key US metro regions (2012-2016)
Aug 6, 2017 – Good time to buy or good time to sell? Fannie Mae’s monthly Home Purchase Sentiment Index (R)
Aug 5, 2017 – Buy versus Rent – Trulia’s calculator (Apr 2017)
Aug 4, 2017 – Annual change in US home prices across top 20 cities (May 2011- May 2017)
Aug 3, 2017 – Best time to get a deal: time period when best discounts are available in housing market
Aug 2, 2017 – Clark County, Washington state (Portland Metro area, OR) single family home prices (2012-2017)
Aug 1, 2017 – Multnomah County (Portland Metro area, OR) single family home prices (2012-2017)
July 31, 2017 – Washington County (Portland Metro area, OR) single family home prices (2012-2017)
July 28, 2017 – US home prices 1890-present
July 27, 2017 – Median house price for Portland Metro neighborhoods
July 26, 2017 – Average rent for Portland Metro region
July 25, 2017 – Path of total solar eclipse through Oregon
July 24, 2017 – Portland metro area household income by region