Land, Homes have Proven to be Disappointing Investments

Land, Homes have Proven to be Disappointing Investments

Land, Homes have Proven to be Disappointing Investments

$DIA, $SPY, $QQQ, $VXX

Robert Shiller, Nobel prizewinner and Yale professor, says that today land is not the best place to grow a savings nest egg because technology changes the ways people use property.

“Despite solid price increases over the last few years, land and homes have actually been disappointing investments,” he writes in an op-ed for the NY-T’s. “In fact, it’s far from inconceivable that the real price of land could be even lower than it is right now.”

Dr. Shiller points to data that show farmland prices have not kept pace with economic growth, and home prices have advanced a meager 0.6% a year in the past 100 years. Not such good investments.

GDP is 15.5X bigger than it was in Y 1929, when the US started keeping track, which translates into growth of 3.2% a year.

“Because of technological advances collectively called the Green Revolution, there has been something akin to a long-term supply increase” in arable land, he says, pointing to advances in fertilizer technology and crop science that have helped farmers grow more food without requiring more land. In addition, milk and meat may be created in laboratories of the future, eliminated the need for livestock.

Another trend is toward smaller-sized housing units that provide basic amenities and the proximity to urban areas.

“We have recently seen interest in ‘micro-apartments,’ which may be little more than 200 square feet but manage to squeeze in a kitchen, a bathroom and an entertainment center,” he says. “For many people, this tiny space, with its proximity to like-minded people, interesting neighborhoods and restaurants, is preferable to living in a house in a far-flung suburb.”

Homebuilder optimism slipped this month, while their outlook for new homes was still positive. The National Association of Home Builders/Wells Fargo builder sentiment index fell 1 pt to 59, in line with the average reading this year.

Tuesday, US major stock market indexes finished at: DJIA +25.96 at 18558.25, NAS Comp -19.41 at 5036.37, S&P 500 -3.11 at 2163.72

Volume: Trade was light with just 736-M/shares exchanged on the NYSE:

  • DJIA +6.4% YTD
  • Russell 2000 +6.4% YTD
  • S&P 500 +6.0% YTD
  • NAS Comp +1.0% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.31) Neutral (0.19) Very Bullish (0.50) Bullish (0.25)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.25) Bullish (0.25) Bullish (0.35) Neutral (0.14)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.31) Neutral (0.06) Very Bullish (0.56) Bullish (0.31)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.32) Bearish (-0.36) Bearish (-0.33) Bearish (-0.25)

Stay tuned…

 

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