Is Housing or Stocks a Better Investment for 2015 in Fresno, CA. 93720
Where do people turn who are looking to build up their nest egg and have long term investments built up? If you live in the greater Fresno area should you buy a home for the first time, buy another investment property or turn to the stock market? A couple articles that I read recently have fueled my thoughts for this post. One of them is from CNBC which is primarily a "stock friendly" website. The other article was found on Trulia's site. Trulia is a national real estate site.
To sum up the CNBC article, the main point was that the stock market has outperformed the real estate market for over 100 years. I am not going to dispute that but what the author doesn't mention is that you can leverage real estate in ways that you can't leverage securities. The latest talk recently was that Fannie Mae and Freddie Mac are going to come out with a 3% down loan which is a little less than the 3.5% FHA loans that have existed for quite some time. So with $3,000 down I can go buy a $100,000 house. The article doesn't mention any of this but points to the measly gains of 1.5% per year over the long term in housing. The gains or returns all depend on initial investment. This may be true of the person paying with all cash but in the times of 3-3.5% down mortgages, the return on investments or gains are calculated way differently. For instance, lets say that a $100,000 investment property was purchased while putting $25,000 down vs. paying all cash. The person putting 25% down is going to have a much greater return on investment assuming rental income was the same in each scenario because less money left their pocket initially to secure the investment. There are other factors to look at too like mortgage interest write offs, maintenance, etc. but that is for another post. The author left out the variables of choosing to put little money down versus paying all cash and for this reason the article is severely biased.
Jumping to this next article by Trulia, it ranks Fresno as a top 10 market to watch for 2015. Cities that were considered to be 5%+ inflated were not included. While I do understand that real estate is more of a long term investment than the stock market where you can get in and out multiple times a day, this does give buying a home in Fresno over the next 12 months look like a very good option to consider. Do you think I am way off base here? Let me know in the comment section.
Is Housing or Stocks a Better Investment for 2015 in Fresno, CA. 93720
Fresno and Clovis Real Estate Prices
