Wall Street pushes financial assets as the route to financial independence. But several studies I’ve seen say that real estate is the key difference between the very wealthy and others. This article says that land is at least as important and might be the key difference between the 1% and others.
But ignoring land is a mistake. Despite the explosive growth of corporations since the Industrial Revolution, land still represents a huge percent of all the wealth in the economy. What’s more, focusing only on capital gains neglects the extremely important fact that land earns income from rent. If you live in your own house, this income is implicit — living in your own home means you don’t have to pay rent to someone else. But if you’re a landlord, you get checks every month, just like stockholders receive quarterly dividends. And in the same way that a stockholder can use dividends to buy more shares, a landlord can use rental income to buy more property — thus, rent needs to be counted in the return to housing.