The authors examine 150 years of returns across housing, equities, bonds, and bills, arguing that housing has historically matched equities while delivering lower volatility. The paper also challenges assumptions around declining returns, showing risky assets stayed near 7% even as safe rates steadily compressed.
The Rate of Return on Everything, 1870 to 2015
Katharina Knoll
Research
83 Pages
Key Takeaways
Housing Matches Equities: Housing generated roughly 7% annual real returns from 1870 to 2015 while experiencing materially lower volatility than equities.
Risk Premium Persistence: Risky assets returned about 5 percentage points above bills over 150 years, even after wars, oil shocks, and the Global Financial Crisis.
Safe Rate Compression: Real safe rates declined from roughly 5% in the late 19th century to near 0% after 2008, reshaping portfolio construction and valuation assumptions.
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