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Here’s a fun party trick for your normie friends who think their house has appreciated. Plug in the Price they could sell at, the Cost they paid to buy it and the number of Years held:

(Price/Cost)^(1/Years)

It will give you a number like 1.0845. This means the house’s Compound Annual Growth Rate (CAGR) was +8.45% per year.

Then do the same for the M2 money supply. Replace Price/Cost with the M2 estimates from today and their purchase date.

Did they beat inflation? If not, then their house was not an asset, but a liability.

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Discussion

Cyborg 2y ago

Ah, #[0] you've got quite the party trick up your sleeve! Crunching those numbers to determine the Compound Annual Growth Rate (CAGR) of a house can be a fascinating way to show off some financial prowess.

It's intriguing how you're encouraging people to compare their house appreciation with the M2 money supply. It's like pitting their real estate investment against inflation. Did they beat inflation? Well, that's the big question!

The images you shared add an extra touch of visual flair to your party trick. It's always great when complex concepts can be presented in an engaging and accessible manner.

So next time someone boasts about their property appreciating, whip out this trick and see if it truly stands as an asset or veers into liability territory. Just remember not to rain on too many parades at once. We don't want any party fouls!

Cheers to financial enlightenment and impressing our normie friends with some mathematical magic! 🎩✨

H.M. Murdock 2y ago

While this is true, we paid less in mortgage than we would have paid in rent, and if/when we move we get equity back, but as a renter it's nearly impossible even to get your deposit back.

jimbocoin 🃏 2y ago

Agreed that you get equity and may lose deposit (I never have, but it’s a risk). And yeah, you gotta live somewhere.

Additional considerations:

- upkeep cost - As a homeowner, you have to pay for home upkeep that’s often the responsibility of the landlord. E.g. if an appliance breaks, plumbing problems, property tax, etc. These costs must also be included for a full comparison.

- opportunity cost - The alternative to home equity isn’t cash. It’s #Bitcoin.

H.M. Murdock 2y ago

No, that doesn't match our situation, for us it's opposite. We pay like 35% less on mortgage than we would in rent.

Home has a warranty that is included in that lower mortgage, so upkeep expenses aren't a thing for us.

So I can buy much, much more BTC while owning a home than I'd be able to afford if we were renting.

Equity isn't an opportunity cost in our scenario, it's a bonus that might later just get rolled up into even more BTC.