05-11-06 - 1


Housing is a great investment because of 1) the tax deductions and 2) the leverage. Hardly anyone who invests in real estate understands this. Other than those factors, jumping in a rising market is just like trying to jump into oil or gold or anything like that, but housing is much worse for riding a bubble because it's much harder to get in & out, and the transaction costs are huge. On the other hand I've written before about how awesome the power of leveraging is in a rising market. The great thing about housing is that you can make a risky leveraged investment and the government subsidizes the risk.

No comments:

old rants