5

Real estate will be a poor investment in 20 years. Here is why

 2 years ago
source link: https://nextbigwhat.com/real-estate-will-be-a-poor-investment-in-20-years-here-is-why/
Go to the source link to view the article. You can view the picture content, updated content and better typesetting reading experience. If the link is broken, please click the button below to view the snapshot at that time.
neoserver,ios ssh client

Real estate will be a poor investment in 20 years. Here is why

How-a-Rs-25000-Crore-Boost-Help-the-Real-Estate-Industry-730x410-1-390x219.jpeg&nocache=1

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. – Alex Svanevik

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.

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.

4) cont.

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.)

In summary:

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

Disclaimer: I’m a random person on Twitter. This is not financial advice. I have no credentials except my profile pic is a penguin.

Sign Up for NextBigWhat Newsletter

Daily.

Create your own mental model and logical fallacies. How to start thinking critically.

critical-thinking-skiils-390x223.jpeg

“Fact-checkers are just fake authorities anointed by the media, according to fact-checkers.”

How to think critically:

(mental models and logical fallacies)

Whenever possible, confirm the “facts.”

“Fact-checkers are just fake authorities anointed by the media, according to fact-checkers.” — @naval

Authorities can make mistakes.

Don’t fall for the “arguments from authority fallacy.”

“In science there are no authorities; at most, there are experts.” — Carl Sagan

Survival of the fittest argument.

Always think of multiple explanations for an argument.

Then think of tests to disprove each explanation.

Whatever remains has a better chance of being right than simply sticking with the first idea.

Two mental models that fit here:

Occam’s Razor: When faced with multiple explanations pick the simpler.

Hanlon’s Razor: “Never attribute to malice that which is adequately explained by stupidity.” In other words, there can be honest mistakes.

Debate all points of view.

“Be skeptical of the side of a debate that is less willing to try to see the other side’s point of view.” — @sama

Be open to disproof.

Unfalsifiable ideas are not worth much in the grand scheme of the universe.

“It’s smart to take help of a pessimist to find blind spots in an idea you feel very confident about. That’s their only good use I’ve found so far.” — @kunalb11

Choose knowledge over ego.

Just because an idea is yours doesn’t make it right. Accept that others can and will find faults with it.

“The trick to viewing feedback as a gift is to be more worried about having blind spots than hearing about them.” — @JamesClear

Follow @sumitupgarg

Sign Up for NextBigWhat Newsletter

Daily.


About Joyk


Aggregate valuable and interesting links.
Joyk means Joy of geeK