If you went back to 1958 with 10,000 and had the choice to only invest in the SP 500 or Bay Area Peninsula housing whic (San Jose: sale, real estate)

[Perma Bear]

I'd go for the Bay Area housing. I could buy half a street in Belmont, San Carlos, San Francisco, Menlo Park, or Redwood City (down payments) and continue to rent them for 50 years. I'd get far more than I'd get in SP 500 dividends.

[Harpaint]

Originally Posted by Perma Bear

I'd go for the Bay Area housing. I could buy half a street in Belmont, San Carlos, San Francisco, Menlo Park, or Redwood City (down payments) and continue to rent them for 50 years. I'd get far more than I'd get in SP 500 dividends.

Would you have qualified for the loans?

[Perma Bear]

Originally Posted by Harpaint

Would you have qualified for the loans?

Easily, houses were so cheap back than that the Middle class could easily afford a ranch home.

[fumbling]

It's apples and oranges, you typically buy real estate with 20% down, you typically buy the SP 500 with cash or if on margin at most the equivalent of 50% down, so yes with real estate your returns are higher because you're more highly leveraged. But on an unleveraged basis from the late 50s to 2015, the SP500 total return increased about 130X so that's like real estate prices going from $25k to $3.25 million.

[Perma Bear]

Originally Posted by fumbling

It's apples and oranges, you typically buy real estate with 20% down, you typically buy the SP 500 with cash or if on margin at most the equivalent of 50% down, so yes with real estate your returns are higher because you're more highly leveraged. But on an unleveraged basis from the late 50s to 2015, the SP500 total return increased about 130X so that's like real estate prices going from $25k to $3.25 million.

Sounds on par with Menlo Park's appreciation.

[LarsMac]

Originally Posted by fumbling

It's apples and oranges, you typically buy real estate with 20% down, you typically buy the SP 500 with cash or if on margin at most the equivalent of 50% down, so yes with real estate your returns are higher because you're more highly leveraged. But on an unleveraged basis from the late 50s to 2015, the SP500 total return increased about 130X so that's like real estate prices going from $25k to $3.25 million.

Apples and Oranges!!
I would invest in some of the orchard lands off 101 on the north side of San Jose.

[Perma Bear]

Originally Posted by LarsMac

Apples and Oranges!!
I would invest in some of the orchard lands off 101 on the north side of San Jose.

The Peninsula had better appreciation.

[bodyforlife99]

Originally Posted by fumbling

It's apples and oranges, you typically buy real estate with 20% down, you typically buy the SP 500 with cash or if on margin at most the equivalent of 50% down, so yes with real estate your returns are higher because you're more highly leveraged. But on an unleveraged basis from the late 50s to 2015, the SP500 total return increased about 130X so that's like real estate prices going from $25k to $3.25 million.

That's kind of a ridiculous statement since the 20% down was the norm for the time. So of course a home would be leveraged out at 5/1. As you stated, even if someone bought stock on margin, they would only be at 2/1 max, but they'd have to pay 8-10% for that privilege and that interest wouldn't be deductible for tax purposes. In addition, like a home, selling a stock exposes one to capital gains taxes. The same could be said for the sale of a house with one caveat...the capital gains exclusion which is currently at $500K for a married couple. In addition, the ability to itemize opens the door for other deductions one might not have been able to take. Taking these things into consideration, the stock market doesn't hold a candle to the gains in the Bay Area.

[BayAreaHillbilly]

Burlingame and as close to the Hillsborough border as money would buy.

[bentobox34]

Originally Posted by Perma Bear

I'd go for the Bay Area housing. I could buy half a street in Belmont, San Carlos, San Francisco, Menlo Park, or Redwood City (down payments) and continue to rent them for 50 years. I'd get far more than I'd get in SP 500 dividends.

What about the opportunity cost of your labor? Managing several properties for 65 years is nothing to sneeze at.

Would the rent have covered your monthly costs in the 1950s? Did people actually rent freestanding houses back then? (Why rent when you could buy?)