Do all of these things either alone or together outpace the increase in value of a house?

  • 9
    You can’t live in stock and CDs… seems like a flawed comparison.
    – quid
    Aug 3, 2021 at 6:24
  • 7
    And you can't sell off 5 square meters of your kitchen to pay for your unexpected car problem! Aug 3, 2021 at 6:39
  • 1
    The question of buying or renting is actually pretty complex and depends on a lot of assumptions about future rent, home prices, interest rates, inflation, stock market returns, etc. On top of that a single home is the exact opposite of diversification and cannot be partially liquidated. There should already be plenty of threads discussing the topic
    – Manziel
    Aug 3, 2021 at 6:44
  • "the increase in value of a house" is a complete unknown. In some regions, house prices currently go up, in others they currently go down. And that can easily change at any time. There are also a lot of things you can't anticipate which might suddenly change the value of an individual real estate property. Things happening with the building itself and things happening in its neighborhood.
    – Philipp
    Aug 3, 2021 at 8:04
  • Does this answer your question? In general, is it financially better to buy or to rent a house?
    – Manziel
    Aug 3, 2021 at 8:58

1 Answer 1


Stocks in aggregate will generally beat the average post costs house return over any 10yr+ time horizon. Certain super hot sub districts of super hot cities can occasionally outrun something like an all world stock ETF over 10+ years but is an extreme outlier. You pay for this with a much higher daily volatility with stocks, but they are also much easier to sell quickly and in small pieces than a house.

Bonds and CDs picture gets murkier. Historically post the very large upkeep/transaction costs, houses index price in the US basically tracks inflation, so would behave somewhere between a CD and a long term government bond. The average house in the US generally wouldn't beat an all world bond ETF over long periods in terms of return.

The big elephant in the room with housing is always the rental yield or cost you would pay to live there. This is much more complex one that is both highly volatile and tied to where the property is. Generally cheaper houses in bad areas have much higher rental yields, lower up front costs due to expected lower capital appreciation; better houses in better areas have much lower rental yields but much higher upfront costs in anticipation of higher capital growth down the line.

Any and all of these judgements of future growth are hard to make and can be inefficient. Renting to people can quickly become like a full time job, which also has to be factored in to your hourly rate (or now lack of it) in the job market.

The final key part of housing is the leverage that you can gain on it. Banks will generally loan you significantly more on real estate than they will on stocks/bonds/commodities. They will also not margin call you unless you stop making the monthly payments regardless of how much the likely value of the house has fallen unlike most other investment assets (if the economy in the local area has collapsed and your job has gone/rental yields have collapsed this is still a clear risk as it is highly likely you won't be able to make the payments).

This means smaller edges in real estate can be better than larger edges in other investments purely because of how much leverage you can take on, although managing large amounts of debt carries its own impacts that many are not comfortable with.

Overall this is quite a complex question that depends on exactly what you intend to do with the property and how you intend to finance it.

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