Robert Shiller has shown that over the long term and across the world, house prices have increased roughly in line with inflation. This makes sense because the weighted average prices of all items rises with inflation, by definition, and housing typically has a relatively high weight (about 1/3) in inflation calculations.
If you're going to make estimates for appreciation to determine if you should buy, 0% real (~3% nominal, given near term inflation break evens) seems like a better place to start. For comparison, you can get over 2% real with TIPS of all durations at this time.
And closing costs (especially real estate agent fees) will eat up about 6% of the house price for each sale. High transaction costs are why you typically don't want to buy and sell frequently.
If you're going to make estimates for appreciation to determine if you should buy, 0% real (~3% nominal, given near term inflation break evens) seems like a better place to start. For comparison, you can get over 2% real with TIPS of all durations at this time.
And closing costs (especially real estate agent fees) will eat up about 6% of the house price for each sale. High transaction costs are why you typically don't want to buy and sell frequently.
Statistics: Posted by fujiters — Sat Apr 27, 2024 5:11 am — Replies 129 — Views 12843