Housing Bubble 2: Return of the Ugly

Shit, you’re right! Correct number is about £5 million. Apparently missed final step and copied the percent (10.9^54^ ≈ 28e3). My bad.

But yeah even if he bought the house in 1979 at 20% equity and house appreciated that much, effective APY over 45 years would be 1.2%. To check: (2%*(6e5/17e3))^-45^

Anyway it’s just an illustration I’ve given to friends, especially fellow millennials who often mention how their parents’ or grandparents’ house multiplied in value as their motivation for pursuing a house instead of savings.

It’s to show that there’s a better way to save than home equity, because few of us were taught that stuff and it’s not as daunting as it seems. Long-short usually you want as little money tied up in home equity as possible, so when the typical down payments have risen to hundreds of thousands of pounds, it’s quite difficult to justify over renting and putting more into pension.