I think real estate will have been a poor investment 20y+ from now.
Some reasons why

1) Options

Our parents’ generation had one asset class to invest in: their home.

Coming generations will have a lot more options available to them. Stocks are much more available now, and crypto + metaverse assets will add tons of new assets.

So RE has a lot more competition.

2) Politics

With rising inequality, RE ownership will likely get more concentrated.

If >50% rent (rather than own), politicians will pander to their wishes.

Pro-tenant policies will make it less attractive to own property.

3) Population growth

The “always up” mindset of property prices has been accompanied by an insane population growth.

This will slow down over the next decades.

Less people growth, less growth in demand for housing (ceteris paribus).

4) Leverage

Buying a home has been the only way to get cheap leverage on an investment.

If you have $100k in savings, banks can offer (at least) $400k in a mortgage, giving you 5x leverage at ultra-low interest rates.

This is changing.

You can already collateralize crypto. For many reasons it’s a vastly superior asset to use as collateral, and it’ll only get better.

Over time this means the RE advantage of leverage faces more competition. (Similar to the 1st point.)

5) Mobility

Coming generations will move around more, which means owning a home is less appealing (except for rental income).

Homeowners age is at ATH by the way.

In summary:

I expect the “always up” trend of property prices to meet its end in our lifetime – possibly sooner than most think.

Alex Svanevik

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