The study investigates historical returns across major asset classes since 1870, finding that both housing and equities have generated similar returns, though housing shows lower volatility. It also highlights that, globally, the weighted rate of return on capital was twice as high as the growth rate in the past 150 years.
The Rate of Return on Everything, 1870–2015
Federal Reserve Bank
Research
123 Pages
Key Takeaways
Housing performance: Housing has provided consistent real returns, averaging around 6.6% annually.
Return hierarchy: Both equities and housing have outperformed bonds and bills, which have lower average returns.
Return vs. growth: Asset returns have generally surpassed economic growth rates, impacting wealth distribution.
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