Does Real Estate Create Wealth...really?

[Ben Leybovich]

The 2 basic reasons we buy real estate, according to conventional wisdom, are:

• 1.To protect buying power
• 2.To increase buying power

However, it has been well documented that RE does not outpace inflation. Check out this thread…

Therefore, it seems that the statement - real estate doesn’t create buying power, seems to be a true statement. All it does, it seems, is keep our value relative with inflation. Purchase price of real estate increases by the same amount the value currency decreases.

This accomplishes the first objective of protecting buying power. But, what about objective #2?! We are not in this sport just to remain even-keel. We want wealth…

There are 3 items on the list:

• 1.Forced appreciation
• 2.Income-producing property
• 3.Land-locked markets in which due to fundamentals growth outpaces investing

I don’t know any other ways to create wealth, which is to say to increase my buying power. It’s got to be one or a blend of several of the items on the list.

Thoughts?