Why future house price appreciation is the most important factor in housing as an investment


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Show 1 Answer (Answer provided by Arnold Kling)
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One way to evaluate investments is to use the Capital Asset Pricing Model (CAPM).  This is beyond the scope of this course.  However, CAPM leads to a view that one should invest some of your wealth in a risk-free asset and the rest in a diversified "market portfolio."  The latter would include a diversified portfolio of real estate, but not buying your own home.

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