{"id":2040,"date":"2023-09-22T06:00:00","date_gmt":"2023-09-22T10:00:00","guid":{"rendered":"https:\/\/briofp.com\/?p=2040"},"modified":"2023-09-20T10:32:24","modified_gmt":"2023-09-20T14:32:24","slug":"is-your-home-a-good-investment","status":"publish","type":"post","link":"https:\/\/briofp.com\/is-your-home-a-good-investment\/","title":{"rendered":"Is Your Home A Good Investment?"},"content":{"rendered":"\n<\/a>\n\n\n
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The inspiration for today\u2019s missive comes from Nick Murray\u2019s incomparable industry newsletter. <\/a><\/p>\n\n\n\n

Last month, the Wall Street Journal\u2019s Luxury Homes Section ran an interesting article:  \u201cGroucho Marx\u2019s Onetime Long Island Home Hits the Market for $2.3 Million\u201d<\/a><\/p>\n\n\n\n

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Groucho Marx in 1933. Photo: MPTV\/Reuters<\/figcaption><\/figure>\n\n\n\n

The star paid $27,000 for the property in Great Neck on New York\u2019s Long Island, in 1926.<\/strong>  He lived there until 1931. <\/p>\n\n\n\n

Marx, previously a city dweller, had difficulty adjusting to the suburbs.  He said, \u201cI am becoming well versed in the four topics of conversation, which are of paramount importance in a small community, i.e., domestic help, golf, bridge, and the trappings of mice.\u201d<\/strong>  Sounds kind of grim. <\/p>\n\n\n\n

It recently hit the market with an asking price of $2.3 million. <\/strong><\/p>\n\n\n\n

Murray read this article and immediately wondered what that $27,000 would be worth today if it had been invested in the S&P 500 in 1926 instead. <\/strong> He assumed all dividends were reinvested and no withdrawals taken.<\/p>\n\n\n\n

Would it be more or less than $2.3 million?  Care to take a guess? <\/strong><\/p>\n\n\n\n

Answer:  About $333 million dollars!<\/strong>     <\/p>\n\n\n\n

Put away your pitchforks \u2013 I\u2019m not telling anybody to put all their money in the stock market and forget about buying a house.<\/strong>  Of course, this is just one house \u2013 your mileage may vary. <\/p>\n\n\n\n

I realize the scenario of investing and never touching an investment account for 97 years is really more of a thought exercise than an actuali<\/strong>ty. <\/p>\n\n\n\n

In reality there would be carrying costs, namely taxes to be paid on the dividend income.<\/strong><\/p>\n\n\n\n

However, houses also have carrying costs: <\/strong> real estate taxes, homeowner\u2019s insurance, utilities, upkeep, repairs, and renovations.  As any homeowner can attest, these costs are often significant and always unrelenting. <\/strong><\/p>\n\n\n\n

When you sell your home, there are transaction costs as well. <\/strong> Clients of mine who recently sold their home for just under a million dollars had closing costs (primarily real estate agent commissions) of over $52,000.<\/p>\n\n\n\n

Houses <\/strong>do<\/strong><\/em> have tax advantages. <\/strong><\/p>\n\n\n\n

The mortgage interest is deductible as are real estate taxes.  But these are deducted only if you itemize deductions. Since the Tax Bill of 2017<\/a> far fewer taxpayers itemize.  Further, the tax deduction for real estate and state income taxes is no longer unlimited, but capped at $10,000.<\/p>\n\n\n\n

There is a capital gains exclusion on the sale<\/a> of your primary residence \u2013 single taxpayers can exclude $250,000 of gain and marrieds $500,000 provided certain conditions are met.<\/p>\n\n\n\n

Of course there are non-monetary upsides to home ownership that no investment portfolio can replicate. <\/strong><\/p>\n\n\n\n

No landlord and you can paint and renovate to suit.  For many it\u2019s a place to raise a family and make memories.  And it keeps you out of the rain.<\/p>\n\n\n\n

But as an <\/strong>investment<\/strong><\/em>, on average, according to the Case Schiller home price index, houses show a long-term compounded rate of just \u22481% above inflation.  Compare this to the S&P 500\u2019s (with dividend reinvestment) \u22487% above inflation.<\/strong><\/p>\n\n\n\n

You may well make money on your house \u2013 but keep in mind it is not the only wealth-creating game around, and generally speaking it\u2019s not the best one.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The inspiration for today\u2019s missive comes from Nick Murray\u2019s incomparable industry newsletter.  Last month, the Wall Street Journal\u2019s Luxury Homes Section ran an interesting article:  \u201cGroucho Marx\u2019s Onetime Long Island Home Hits the Market for $2.3 Million\u201d The star paid $27,000 for the property in Great Neck on New York\u2019s Long Island, in 1926.  He […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[7],"tags":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"Michelle Morris","author_link":"https:\/\/briofp.com\/author\/briofp1\/"},"_links":{"self":[{"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/posts\/2040"}],"collection":[{"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/comments?post=2040"}],"version-history":[{"count":3,"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/posts\/2040\/revisions"}],"predecessor-version":[{"id":2049,"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/posts\/2040\/revisions\/2049"}],"wp:attachment":[{"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/media?parent=2040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/categories?post=2040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/briofp.com\/wp-json\/wp\/v2\/tags?post=2040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}