How did your money do over the last 5 and 10 years?  Was housing a terrible investment?  Which did better, stocks or real estate? 

Well look back to 5 years go and say you had chosen to invest in stocks.  If you had $50,000 in (June 2006,) and you had invested in the Dow, you would currently have about $54,870, an increase of 9.7%.  front_400

If you had invested that same $50k 10 years ago in the same Dow stocks, you would have about $54,445, an 8.9% increase.  Basically, any money that you had in the stock market over the last 5 years or 10 years is worth less when you include inflation.  By the way, I have been calling high inflation for about 2 years now, just following most economists.

Now let's say you had invested in Oahu real estate. 

In June 2001, the median price of Oahu homes was about $300,000.   If you had used that $50k as a down payment on real estate, the value of your house would have gained approximately $300,000, and you would have paid your mortgage down to about $206,000 over those 10 years.   

Fast forward to May of this year, and the median sale price on Oahu in May was $595,000.   Your $50k down payment is now worth about $400,000. 

Now what about the last 5 years?  Didn't the real estate market collapse?  Not so fast...

The median price of Oahu real estate 5 years ago was $600,000, almost exactly the same as it is now.   And your $550,000 loan would have a current balance of $507,500.  So guess what? 

Your $50,000 is now worth about $92,500.  Plus, you received tax write offs on the interest payments that whole time.  Had you invested that $50k and rented a house for the last 5 years, you would have... nothing. 

 Going forward - with rising inflation, a questionable economy, and faltering stocks, if you buy a house, you have something.  You have a house. 

With stocks, 10 years may go by and you may not have anything more than what you invested, and you might even have less.