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For the equity markets - yes, I do indeed figure expected return based on 120-year stats when available, otherwise the longest I can find.
And no, I don't mind specifying the 120 year time frame in future discussions, although I won't go into detail in this post as to why I believe this is a better metric than the last 10/20/30 yrs, despite the fact that barring a technological singularity I'm unlikely to live that long. You may disagree with me, but please be civil.
Finally, the total return on housing is positively auto-correlated up to periods around 5 years*, and negatively autocorrelated for longer periods (again looking at Case-Shiller for the last 120 years). For stocks, the cross-over between positive and negative auto-correlation is less than one year. This means that over a 10-year holding period, the effective beta for housing relative to stocks is much larger than for a 1-year period. For non-flippers, the one year period is too short to be relevant. Thus, housing as an investment doesn't look as rosy once you account for its 10-year beta rather than one-year beta.
*For stocks, total return has two components - dividends and capital appreciation. For real estate, there is also capital appreciation and "dividends". The "dividend" of a house is the market rental value minus the non-purchase costs of ownership (taxes, insurance, maintenance, repairs, renovation, HOA fees, any utilities that would be included in rent, etc.)
I'd also add that in regards to your inquiry about investing in education or employment, the analogy is much less perfect since you cannot liquidate either of them or make a large lump sum investment - at best the initial investment is spread out over a few years. Furthermore, it's much murkier to determine the amount of the initial investment, since it includes not just tuition or training fees, but also foregone income (unless it is a paid internship with comparable pay and benefits to currently available job alternatives).
To be fair, if you invest in real estate by doing a lot of work yourself and putting in "sweat equity", your initial investment also must include the foregone income associated with working on the house instead of doing the same job for someone else and getting paid for it.
Most people don't really understand the value of owning a home. It affords tax-free income in the amount of the fair market rental.
Stay with me...
When you own a home & live in it, you "pay yourself rent" in the amount of the fair market rental rate. This is, of course, not reported as income on an IRS form 1040, so that income is tax-free.
Stay with me...
Imagine you and I own otherwise identical houses right next to each other. Under normal circumstances, we live in the houses we own. Imagine as a thought experiment that you rent your house to me, and I rent my house to you. Because they are otherwise identical, we each pay rent to the other, and each receive rental payments from the other. Those cancel each other out.
But not when it comes to income tax time. When calculating our respective tax obligations, each of us has jobs with income, and maybe some stocks/bonds, and under the hypothetical example, each of us would also report EXTRA rental income.
Let's say for the sake of argument that the fair market rent is $3000/month. So, each of us pays the other $36,000/year, and each of us receives $36,000/year. At tax time, each of us reports an extra $36,000 in extra income. We also have some expenses associated with that income such as depreciation expense, and various other landlord expenses for repairs and the like.
At the end off the day, though, we probably end up paying our marginal tax rate on that extra $36,000 in income.
So, coming back to reality... when we own a home & live in it, we "pay ourselves rent" and that rent is tax-free income. If the fair market rental rate is $3,000 per month, we have tax free income in the amount of $36K/year. Not too bad.
That, boys and girls, is the true financial benefit of owning a home
Isn't it just awesome to have a Constitution and a body of law of the property owners, by the property owners, and for the property owners?
Property was dear to the founders... many ventured to into the unknown, crossed the ocean never to see family and friends again for the chance to "Own"
I come from a long line of family dairy farmers on one side and the land is "Everything" and was instilled as far back as I can remember the I needed to work, save money so I could buy a house...
Being right out of college in my early 20's and owning my own home was one of the greatest feelings ever... never mind it was a shack scheduled for a condemnation on a 25 x 100 lot built in 1911 in East Oakland CA... it was mine and I paid cash and still own it today.
if you want to be rewarded for financial failure you need to turn to some mean tested benefits.
that is where those that have failed financially can get what others do not qualify for.
Not really, there is very little assistance for childless burger flippers.
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