San Diego Real Estate Risk&Profit
I used the data from Federal Housing Financing Agency, and analyzed the house price index of San Diego Carlsbad Area over 25 years, from 1991 to the end of 2015
Using the first quarter of every year
The standard deviation is about 7% and annualized return rate is about 4%, compared to S&P 500 standard deviation about 15% and 10% return (about 12% for large cap, and 15% for small cap )
Considering this value, the sharp ratio is lower than investing the stock market,
But it still outperforms some fund, for example this one ONECX, it has 11% stdev and 4% return over 15 years.
However, if the home is bought as an investment, it will be lucrative. For example, if a house is 230K, we put 200K as downpayment we rent it for 1K per month, after three years, the house will worth about 260K, we will make a profit of 380K, in three years, even if we want to sell it, and we pay the commission which costs 150K, we still make a profit of 230K, that's about 15% annual return , with 7% stdev
Using the first quarter of every year
The standard deviation is about 7% and annualized return rate is about 4%, compared to S&P 500 standard deviation about 15% and 10% return (about 12% for large cap, and 15% for small cap )
Considering this value, the sharp ratio is lower than investing the stock market,
But it still outperforms some fund, for example this one ONECX, it has 11% stdev and 4% return over 15 years.
However, if the home is bought as an investment, it will be lucrative. For example, if a house is 230K, we put 200K as downpayment we rent it for 1K per month, after three years, the house will worth about 260K, we will make a profit of 380K, in three years, even if we want to sell it, and we pay the commission which costs 150K, we still make a profit of 230K, that's about 15% annual return , with 7% stdev
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