9% annualized return. SFBA annualized return is between 6-8% post WW. So I think you are not comparing Apple with Apple, likely that those houses are re-modeled 
completely. 6-8% includes minor remodeling just to keep the house livable.
6-8% is misleading. Itās valid for places where land value is almost zero. Itās more like $10k per year adjusted a bit for the geographical location. Thatās 0.5% for a Lynbrook home. Even that seems high. Who in the bay area spends 10k per year for repairs.
Pretty sure your numbers are inaccurate. Show us any house that manage the 9%.
Looked up a recent sale for you.
Yes thatās 8.8% compound from 1970 to 2018. Of course thereās a lot of upkeeping expenses, taxes etc along the way but still pretty impressive.
In 1970 that part of South Bay is mostly farm land. The semiconductor revolution just got started. Intel was formed in 1967 in Santa Clara.
Do you expect the 8.8% return will hold for Cupertino in the next 50 years? I donāt think so. To get that kind of return you need to bet on some totally neglected area just at the cusp of a big revolution. Pretty sure it aināt gonna be Cupertino.
Why not. The iPhone revolution is still young.
They are saving on rent, which should be at least $3k per month wherever they live in the bay area. Their PITI must be less than that. So in fact their return is higher than 8.8%. Thatās the advantage of long term buy and hold which I was trying to point out.
No one can predict the future. But if you have to bet on innovation I donāt know if there is even a close second.
1967 to 2018, assuming $45k in 1967 is 8%. I have assumed no major renovation.
It was $40k in 1970. So it was much lower.
If you invest 9k in sp500 in 1967, how much do you have now?
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Only this one?
10 million
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7-11% per year, vary from $283k to $1.81m
Another rags to riches example is Shenzhen, Chinaās Silicon Valley. Used to be farming villages like the South Bay. Itās still not as expensive as here.
Dividend is taxed so SP 500 return needs to be adjusted downward.
This house is 10x better than SP 500. Rent savings should more than offset dividend.
Even if he bought a house in Oakland, it still beats the index
Whether this particular house is good or not I donāt really care. Yes itās good. But how does this help me? Will it grow 8% a year for the next 10 years?
That would mean it willl more than double. Do you think this house will be worth more than 5m in 2028?
No
Wrong comparison. If youāre going to compare S&P, should compare the entire US RE market. If you want to compare a house in Cupertino, compare it to AAPL.
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But I am pretty confident S&P will return 10% or better in the next 20 years.
Yes.