Got Real Estate?

Let's face it, real estate is the 'gold standard'.

If you have assets, you've probably got real estate. Why? Because as Maslow said 'living indoors is cool.' Ok he didn't say that, but he did say 'shelter' is right up there with food and water as pretty important to our overall quality of life.

But is it an investment? Because real estate is typically leveraged when you buy it, and because it tends to keep going up in value, it becomes for the majority of the population ' their largest single asset. Hard to say it's not an investment.

Looking at the chart below, you have to be in the top 20% of all income earners for real estate to not be your biggest asset. If you are in the top 20% then equities become your biggest asset in time as they grow and compound.

The house is really the birthplace of wealth for most people.

Who's managing your real estate wealth?

A few facts on wealth creation: from KKR Global Macro

"In 2021, the average U.S. house appreciated by $53,000, which was $3,000 more than the average U.S. household income.

High-end consumers tend to own homes, whereas low-end consumers tend to rent. Said differently, home ownership has become one of the most striking determinants of wealth status – likely more important than employment status – coming out of the pandemic."

On the liabilities side, inflation has lowered debt servicing costs on existing mortgages, with the average mortgage payment falling from 7.2% of disposable income at the onset of the GFC to just 3.8% today. These shifts have allowed high-end consumers to build cash balances, despite paying higher prices for their homes."