Why Land and Homes Actually Tend to Be Disappointing Investments

Over the long term neither farmland nor housing has been a great place to invest money. Robert Shiller writes on New York Times: “Buy land: They’re not making it anymore. That often repeated adage sounds like good financial advice. But over the long run, it hasn’t been. Despite solid price increases over the last few years, land and homes have actually been disappointing investments.” He went on to show that over the century from 1915 to 2015 the real value of American farmland increased only 1.1 percent a year. With a growing population, that’s barely enough to keep per capita real land value unchanged. Real home prices rose even more slowly over the same period with an average of only 0.6 percent a year. To put this in perspective, the real gross domestic product in the United States grew an average of 3.2 percent a year from 1929 to 2015. That’s a much higher growth rate than for real estate. (nytimes.com)