Home Price Indices Taking Into Account Cost of Leverage?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
BeginnerInNYC
Posts: 23
Joined: Mon Oct 17, 2016 4:53 pm

Home Price Indices Taking Into Account Cost of Leverage?

Post by BeginnerInNYC » Mon Mar 12, 2018 10:30 am

I was recently looking at some of the home price index data on FRED (example: this chart tracking condo prices in New York https://fred.stlouisfed.org/series/NYXRCSA). They also have the various flavors of the Case-Shiller Home Price Index.

But most people buy homes with mortgage financing. So, if you're looking at the historical performance of home ownership as an investment, these plots are missing an important factor.

Does anyone know of a tool similar to FRED or Portfolio Visualizer (or way to use either of those tools) that would let you chart the historical performance of leveraged bets on these home price indices (I realize you can't buy an index, but that's secondary), taking into account the historically-appropriate cost of mortgage debt?

BeginnerInNYC
Posts: 23
Joined: Mon Oct 17, 2016 4:53 pm

Re: Home Price Indices Taking Into Account Cost of Leverage?

Post by BeginnerInNYC » Mon Mar 12, 2018 10:48 am

I suppose, although it's somewhat different, one alternative is to look at the total return chart of an ETF like REZ, which invests in residential REITs that are presumably leveraged.

e5116
Posts: 369
Joined: Mon Oct 05, 2009 11:22 am

Re: Home Price Indices Taking Into Account Cost of Leverage?

Post by e5116 » Tue Mar 13, 2018 2:19 pm

BeginnerInNYC wrote:
Mon Mar 12, 2018 10:30 am
I was recently looking at some of the home price index data on FRED (example: this chart tracking condo prices in New York https://fred.stlouisfed.org/series/NYXRCSA). They also have the various flavors of the Case-Shiller Home Price Index.

But most people buy homes with mortgage financing. So, if you're looking at the historical performance of home ownership as an investment, these plots are missing an important factor.

Does anyone know of a tool similar to FRED or Portfolio Visualizer (or way to use either of those tools) that would let you chart the historical performance of leveraged bets on these home price indices (I realize you can't buy an index, but that's secondary), taking into account the historically-appropriate cost of mortgage debt?
Agreed, but it could also be said that those who purchased when mortgage interest rates were high likely refinanced later when rates went down. So, while it begins as a "fixed" rate, it can change -- thus, looking at the rate at the purchase date would not give an accurate assessment of the historical performance.

Sorry, but don't know of any tool that has that taken into account.

Post Reply