Go to Jeff Salisbury LWGate Home Page.From: Ron Rothenberg <Homebase@world.std.com>
Subject: Return on real estate
Date: Thu, 28 May 1998 20:08:41 -0400
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<<< Subject: Real Estate Average Returns? I often read that the long term average return on stocks is about 10% a year, or 6.5% after inflation. I am wondering about long term average returns on real estate, such as direct ownership and rental of residentatial and commercial real estate (assuming property has no loan). >>>> How long? Professor Carl "Chip": Case, economist at Wellesley College calculated the long-term real return on land in Middlesex County, Massachusets as being about 3% / year since the Civil War. Averages are by their nature deceptive, especially when the standard deviation is so large. Human beings have, on average, a little less than one testicle and a bit more than one ovary!!! It's a fact, though not a terribly useful one. Real estate is a set of millions of micromarkets. My sense is there are not a lot of people making money in single-unit housing. There have been good returns comparable to equities in multifamily housing, though the standard deviation is still large. It is very possible for an individual investor to get good returns in real estate (though not in single unit properties) in most parts of the country - but it requires some effort. - -rsr- Ron Rothenberg, CFP Exclusive Buyer's Broker Belmont, MA 02178 - -
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