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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: David Jones who wrote (5707)	9/30/2002 9:42:55 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

Looks like real estate has been very good investment. - David Jones csupomona.edu The charts you finished reviewing show home prices have provided a compounded return of only 2.08% per year in Southern California since 1990 - and now prices are beginning to decline! Northern California was stronger with a 4.87% compounded annual increase. If that's your idea of a good investment you don't realize US government bonds in 1990 provided a yield of 8.92%. Mortgage rates during this period ranged from 10.5% in 1990 down to 6% recently. Let's assume you actively refinanced and had an average mortgage rate of 8.25% during this period (we'll forget the loan costs). That's a 6.5% annual loss in Southern California and a 3.35% annual loss in Northern California. Add in property taxes and maintenance and subtract the rental value. If you bought real estate with a mortgage during this period of time your loss has been substantial. If you bought real estate with 100% cash your return was less than a savings account at the bank. It would take some serious government subsidies to make that investment even pathetic. From 1990 until today, the stodgy Dow Jones 30 Industrials have provided a compounded return of 9.25% per year, even with the recent declines! Personally I bought higher octane stocks and sold everything two years ago. Let reality wash over you and open your mind.