Here is an interesting chart from MSM Money.com, Case
Shiller. This report is not a prediction
but what actually happened between January 2000 and June 2012. It shows cash on
cash return. In other words when buying
a home for $300,000 a buyer puts down $15,000 (5%) to $60,000 (20%). When the
home appreciates by 5% then that home is worth $315,000. That is a gain of
$15,000 return on one’s investment. If $15,000 which equals a return on
investment of 100%. Putting $60,000 down that 5% appreciation equals a return
of 25%.
This differs from investing in the stock market which
requires full payment for any stock investment.
That same $15,000 in stocks with a 5% return means the investor has
gained $750. The $60,000 invested would mean a gain of $3,000.
In addition normally there will be taxes to pay when selling the
stocks. Selling one’s personal residence would result in a taxable event if the
gain is more than $250,000 for a single person and $500,000 for a married
couple.
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