Reply to My friend’s home in Palo Alto tripled in value in 10 years!

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]That's a 12% y/y rate of return.[/quote]

The stock market more than tripled in value in the last 10 years -- the sustained rise that started under Obama (once the financial crisis was over) and continued until today interrupted only by COVID.

S&P was 1,200 in 2011, and is around 4,000 today.[/quote]

Ok let's assume you are right. 
What you don't understand is that real estate is a leveraged investment.
Buy a $1.5m house, put 20% down ($300k). House triples in 10 years ($4.5m). Your profit is $3m. You have 10x your investment. That's called leverage.
The same $300k invested in the S&P would have given you a 3.5x return on your investment at best.

[/quote]

That's true, of course.

But leverage has more risk too: more risk of downside.  If the house went down to $1.2 M in price, when you tried to sell, you might owe money.

There's no such thing as a free lunch.  Buying a home is  a leveraged investment.  If the market is going up as it has recently, great.  If it goes down that's not great.[/quote]

If you hold your real estate over time, in most areas arose here, it is more likely that it will go up in value than go down. 
[/quote]

Not true, especially with condos. Also getting rid of RE is horribly $$$. The transactions fees for buying and selling, even without the real estate agent commissions, are a crime. We bought and sold 3 houses so far in Virginia and I could have bought a condo in DE with all the fees that I've paid.[/quote]

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