“Same place but the whole house for $7,750 and came with gas or electric lighting”


This is awesome – thanks to a reader for sending:

“You listed an apartment @ 1201 Clifton St NW [$1,875/Mo], for a 2 bedroom, 1bath earlier this week. But check this ad from June 4, 1910 from Washington Times. Same place but the whole house for $7,750 and came with gas or electric lighting.

Also 1211 Clifton St, the home on the far left of the original ad just sold this past Sept, 2015 for $1.4 million. So $7,750 in 1910 – $1.4million in 2015, talk about return in your investment!”

41 Comment

  • “Take the 14th or 11th st. car” – Also a nearby street car 😉

  • And yet, there’s a news item about a shooting. Plus ça change…

  • Little over 5% return over the 105 years….

  • cool! I thought $7750 sounded like a lot in 1910, but a random inflation calculator says it’s about $194k today.

  • market forces at work! $7,750 in 1913 (the farthest back the BLS Inflation Calculator goes) has the 2015 buying power of $186,270. Quite the return indeed.

  • jack5

    Realistically, it was probably only valued up (one house) to $100k some time around 1995… Then the real appreciation happened from then until now, improved with a renovation making it worth approx $1 mil of (sale) market value. so the smart investor would have bought it in 1996 for the best profit returns. Buying in 1910, the investor would probably not live long enough to realize it’s best profitability. 🙂

  • Others correctly point out that, in today’s dollars, the purchase price was around $200,000. So roughly 100 years later the house is valued at $1.4 mil. That’s around 2% annual growth. If the original $7750 had been invested in stocks, and you assume a relatively modest 7% annual growth rate over 100 years– that’s about $6.7 mil. (Plus you haven’t dumped tons of money into a house for repairs, upkeep, etc.) This is a great post that should caution anyone who thinks real estate is some slam dunk investment. Yes, owning a home is a great accomplishment and a good real asset for most people, but don’t kid yourself into thinking you’ll make much money from it, even in a strong market like DC.

    • on 6/4/1910, the Dow closed at $83.06. It closed today at 17,141. Theoretically, if you’d invested the $7,750 in an index fund, you’d have about $1.6 million now.

    • Your stock market model has its own problems. There was something called the Great Depression that was a problem along the way, not to mention numerous recessions and periods where the stock market was a lagging economic indicator (the early post-WWII years).

    • Was just going to post this. This really proves how incredibly terrible an investment real estate is over the long term.

      $7,750 invested in the stock market in 1910 would be worth $1,807,621 today WITHOUT INFLATION ADJUSTMENT. That’s $1.8M in 1910 dollars.

      $1,807,621 adjusted for inflation is $43,445,903. Yes that’s $43 million 2015 dollars.

      You would have made almost 30x as much by putting that $7,750 into equities.

      Undeniably buying a house is a good way to build up equity, and we’ve had a great run recently. But don’t let the big difference in the numbers fool you – you need to look at this return in context of what you would have earned with other investments.

      • Huh? I don’t follow. Why are you inflation adjusting? The question is you have $7.750. The question is what you can do with it. If you buy this house, in 2015 you would have an asset worth 1.4m. If you bought a DJIA index, per above poster, you’d have 1.6m. You say it is 1.8m.

        Inflation adjusting, when you are taking into account what historically happened over time, doesn’t make sense to me. And it certainly doesn’t make sense to adjust the stock number but not the housing one.

      • justinbc

        “This really proves how incredibly terrible an investment real estate is over the long term.”
        Except you can live in the house. You can’t live in the stock market. Since you have to live SOMEWHERE at least owning the property gives you some ROI, whereas wasting your money on rent gives you nothing in return. Not to mention when you retire you can likely rent the house out for substantial profit and use the funds to move away somewhere much cheaper with less hubbub, if you choose.

        • Right — maybe another way to understand it is to assume you’re buying the house as an investment rental. In addition to the increased value over time, you’re getting monthly return in the form of rent minus mortgage.

          Or, assume you’re buying the house to live in. Your housing costs theoretically decrease compared to renting since you’re not paying landlord’s mortgage plus landlord’s profit margin. So the house may not appreciate as much as the stock market, but your living expenses are lower, freeing up some more of your money to invest other places. Or you’re renting it out for a profit.

          –DC landlord who doesn’t have the stomach for stock market ups and downs

    • I fundamentally agree with the impetus here — this was just a 2% annualized rate of return. You probably could have done better in straight bank interest over that period nevermind investments.

      That said, I’ll note there wasn’t a good way to invest in “the stock market” as a whole in 1910 or even in 1950. Massive automated index funds are a relatively modern invention. You would have had to pick a security or three directly. So you’d have to pick a winner or three rather than an easy index fund or something of the sort.

    • You’re mostly right, but there’s also the matter of rent generated (if renting out) or saved (if living in). Upkeep isn’t cheap, but it’s usually going to be cheaper than rent if you’re living somewhere long enough.
      But, I agree that, in general, people hold home ownership in too high of esteem.

    • The observation of wanderer (and others) that the securities market has better and more consistent returns than real estate is 100% correct. It does not, however, reflect the investment decision faced by most consumers. You formulate the problem as saying: given an amount of money, should I invest it in real estate or securities?
      This does not consider–among other things–the income stream from the property, tax incentives, home mortgage interest rates, variation in the availability of credit (i.e. I can buy 500k to buy a house but not to make a speculative investment), etc.
      The point that real estate is not the rock solid investment many people perceive it to be, and income earners should diversify their savings is a solid and important one. One the other hand I think the comments here oversimplify and overstate the case.

      • Seriously, people here completely ignoring leverage. If you put 20% down on a house and see 2% annualized returns over say 10 years, even accounting for interest you are actually talking about closer to a 6-8% return. Plus tax incentives, plus cost of living benefits.

        Don’t buy too much house, and don’t think it’s a sure bet regardless, but there’s a reason why you talk about homes as a way to build wealth.

  • SouthwestDC

    Mine was renting for $26/month in 1894 (Zillow says you could get $3600/month for it now). If you haven’t tried it already, it’s fun to search the library’s old newspapers for your address: http://dclibrary.org/node/35995

  • It really wasn’t until the post WWII era that housing was considered a good investment, and still didn’t really take off until the 1970s. In 1998, 1211 Clifton sold at auction for $56k. 17 years later it is now worth $1.4M. That’s huge.

    • That’s exactly right. And the reason it became a good investment was because of government backed loans and the mortgage interest deduction.

  • That’s “gas AND electric lighting”, not OR electric lighting.

    Still, $7,000 in 1914 (the farthest back the site I was using has) in 2014 dollars is: $130,000.00 to $3,600,000.00.

  • People don’t have century+ investment windows, so it’s a bit silly to compare an individual owning a house and living in it to buying stocks, over the course of more than a century. Whether housing is a better investment than stocks depends critically on the alternative living possibilities for the homeowner and the financing terms, but since nobody buys on this time horizon there’s no way to make valid assumptions on how to compare.

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