Did S&P 500 outperform California real estate over 30 years?

It depends on leverage. An all-cash California real estate purchase from 1995–2025 underperformed the S&P 500 on a total-return basis. However, leveraged scenarios (25% down, 8.5% mortgage) often matched or exceeded S&P 500 returns due to leverage amplifying home price appreciation, rental income, and depreciation tax shields.

How does Texas real estate compare to S&P 500?

Texas real estate has lower purchase prices and higher rent yields than California, making leveraged scenarios more cash-flow positive. However, Texas has higher property tax rates (~2.1% of assessed value annually) which reduce net returns. This calculator models all five leverage scenarios for Texas from 1970–2025.

Does this calculator include rental income and depreciation?

Yes. The rental mode models rent yield (adjustable), annual rent growth, vacancy, maintenance (1%), insurance (0.5%), property tax (location-specific), and IRS 27.5-year depreciation on the improvement portion. The depreciation tax shield can create a paper loss that offsets rental income taxes even when the property cash flows positively. An interactive NOI breakdown panel shows cumulative net operating income, cap rate at purchase and current, rent yield, and operating cost percentage at any point in the holding period.

What is NOI and cap rate in the real estate return breakdown?

NOI (Net Operating Income) = Gross Rent minus Operating Expenses, excluding mortgage interest, depreciation, and income tax. Cap Rate = Annual NOI divided by property value — the standard metric for comparing properties independent of financing. This calculator shows two cap rates: at purchase (Year 1 NOI / purchase price) and current (last-12-month NOI / current property value), plus rent yield and operating cost percentage as a percentage of current value. These update live as you drag the timeline slider.

What is the difference between Additive and Reinvested cash flow modes?

In Additive mode, dividends and rental cash flows accumulate as cash without compounding. In Reinvested mode, positive cash flows are reinvested at S&P 500 monthly returns, compounding over time. For highly leveraged properties with negative early cash flows, both modes produce identical results since there is no positive pool to reinvest.

Which US metros are covered in this real estate vs stocks comparison?

The calculator covers 54 locations across 5 states plus a national average: Orange County CA, Newport Beach CA, Irvine CA, Yorba Linda CA, Laguna Beach CA, Huntington Beach CA, Los Angeles CA, Beverly Hills CA, Santa Monica CA, Malibu CA, Pasadena CA, Manhattan Beach CA, San Diego CA, La Jolla CA, Del Mar CA, Rancho Santa Fe CA, Coronado CA, Carlsbad CA, San Francisco Bay Area CA, Palo Alto CA, Atherton CA, Los Altos CA, Menlo Park CA, Saratoga CA, California statewide, Dallas-Fort Worth TX, Highland Park TX, University Park TX, Southlake TX, Frisco TX, Plano TX, Texas statewide, Miami FL, Miami Beach FL, Coral Gables FL, Key Biscayne FL, Coconut Grove FL, Brickell FL, Florida statewide, Seattle WA, Medina WA, Mercer Island WA, Bellevue WA, Kirkland WA, Redmond WA, Washington statewide, New York City NY, Manhattan NY, Brooklyn NY, Hoboken NJ, Scarsdale NY, Great Neck NY, New York statewide, and a National average. Each location uses specific property tax rules, marginal tax rates, improvement ratios, and is mapped to both Case-Shiller and FHFA HPI data.

How does Orange County or Los Angeles real estate compare to the S&P 500?

California coastal metros like Orange County, Los Angeles, and San Diego have among the highest long-run appreciation rates in the US — often 6–8%/yr Case-Shiller CAGR — but also the lowest rent yields (3–4%). Leveraged purchases frequently outperformed the S&P 500 on a total-wealth basis when started before 2000 or during low-rate periods, largely due to leverage amplifying appreciation and the depreciation tax shield offsetting rental income taxes. The tool includes 24 California locations from Beverly Hills to Atherton, each with city-specific data.

How does Miami or Florida real estate compare to stocks?

Miami and Florida statewide have shown strong appreciation, especially post-2020, with moderate rent yields (~5%). Florida has no state income tax, which reduces the tax benefit of the depreciation shield compared to California. This calculator models Florida-specific property tax rules and rent growth using BLS CPI rent data.

How does Seattle or Pacific Northwest real estate compare to stocks?

Seattle and Washington state real estate delivered strong appreciation driven by the tech sector, with Case-Shiller CAGR of roughly 6–7%/yr from 1990–2025. Washington has no state income tax, which affects the marginal tax rate applied to rental income and the depreciation shield calculation. The tool covers Seattle plus Medina, Mercer Island, Bellevue, Kirkland, and Redmond individually.

Can I compare NASDAQ or a 60/40 portfolio against real estate?

Yes. The index selector lets you switch between S&P 500 total return, NASDAQ Composite, and a 60/40 blend (S&P 500 / TLT bonds). All three use historical annual return data from 1970–2025 with 2026 estimates and can be compared against any of the 54 real estate locations with any leverage scenario. A 'The Usual Story' overlay is also available — it shows the simplified price-only comparison (S&P without dividends vs home prices without leverage or income) that most financial debates use, so you can see the full picture vs the cherry-picked narrative side by side.

What does the 'The Usual Story' comparison show?

'The Usual Story' is the apples-to-oranges comparison you see in most investment debates: S&P 500 price appreciation only (no dividends) vs local home price index (no leverage, rent, or costs). One side strips out 1.5–2% annual dividends; the other ignores that you borrowed 4–5x your cash to buy the property. Neither asset is shown fairly. Toggling it lets you see the misleading narrative alongside the full simulation — both lines start from the same dollar amount with no financing advantages built in.

How does cash-out refinancing affect real estate investment returns?

A cash-out refinance increases the loan balance to a set LTV (e.g. 75% of current property value), with the difference credited to your cash position. This can boost short-term liquidity and allow reinvestment, but raises monthly payments and total interest paid. For rental properties, refinancing also reduces the mortgage interest deduction, shrinking the depreciation paper loss and its associated tax refund — the net benefit is always lower than the face-value payment savings suggest.

What is the long-term annual return of S&P 500 vs California real estate?

The S&P 500 has delivered approximately 10–11%/yr total return (price plus dividends reinvested) since 1970. All-cash California real estate has averaged roughly 6–7%/yr price appreciation — below the S&P 500 on a total-return basis. However, leveraged California coastal purchases have achieved equity CAGRs of approximately 12–15%/yr in markets like the Bay Area Peninsula, Orange County, and Los Angeles from 1995–2025, driven by 5–7% appreciation compounded on a 4× leveraged initial investment plus rental income and the depreciation tax shield.

How does leverage change real estate returns compared to stocks?

Leverage is the key differentiator in the stocks vs real estate comparison. A 25%-down purchase on a property appreciating at 6%/yr generates approximately 24% equity return on the initial down payment before costs (6% ÷ 0.25 = 24% gross). After accounting for mortgage interest (~6%), property tax, maintenance, and rental income, the net leveraged equity CAGR in coastal CA markets has historically been 12–15%/yr — significantly exceeding the all-cash return of 6–7%/yr and competitive with the S&P 500's 10–11%/yr total return.

What is the Case-Shiller HPI CAGR by city from 1987 to 2025?

Based on S&P CoreLogic Case-Shiller data, long-run nominal annual appreciation rates include: Los Angeles ~5.5%/yr (1987–2025), San Diego ~5.6%/yr, San Francisco ~5.7%/yr, Seattle ~6.5%/yr (since 1990), Miami ~5.0%/yr, Dallas ~4.5%/yr (since 2000), and New York ~4.5%/yr. These are price-only figures. Total-return real estate performance includes rental income, leverage effects, tax benefits, and costs — all of which are modeled in this calculator.

Which US real estate markets outperformed the S&P 500 over 30 years?

On an all-cash basis, no major US metro consistently outperformed the S&P 500's ~10–11%/yr total return over 30 years — all-cash real estate appreciation tops out at 5–7%/yr. With leverage (25% down), coastal markets with strong appreciation did outperform: Bay Area Peninsula (Atherton, Palo Alto, Menlo Park, Los Altos), Seattle/Bellevue (Case-Shiller CAGR ~6.5%/yr since 1990), and coastal Southern California. Texas, Florida, and national markets generally underperformed the S&P 500 even with leverage, due to lower appreciation combined with higher property tax costs.

How do property taxes affect real estate vs stock market returns by state?

Property tax is the largest annual cost drag on real estate returns. Effective rates per $1M property value: California ~$12,500/yr (Prop 13 base rate 1.25%, capped at +2%/yr), Texas ~$21,000/yr (~2.1%, highest drag of any state modeled), Florida ~$11,000/yr (~1.1%), Washington ~$10,000/yr (~1.0%), New York ~$17,000/yr (~1.7%). Texas's high property tax explains why even cash-flow-positive Texas rentals often underperform coastal CA leveraged returns over 20+ years, despite Texas's higher rent yields of ~6% vs CA's 3–4%.

What is the depreciation tax shield and how large is it for a rental property?

The IRS allows residential rental property owners to deduct the improvement value (structure, excluding land) over 27.5 years. For a $1M California property with a 40% improvement ratio: depreciable basis = $400,000 ÷ 27.5 = $14,545/yr deduction. At a 44% combined marginal tax rate (35% federal + 9.3% CA state), this saves approximately $6,400/yr in taxes — equivalent to a 0.64% annual yield boost on the purchase price. This paper loss offsets rental income and, for active participants earning under $150K AGI, can offset ordinary income up to $25,000/yr.

When do high mortgage rates favor stocks over real estate?

At 7%+ mortgage rates, leveraged real estate must appreciate at roughly 3–4%/yr just to break even against the opportunity cost of the down payment invested in the S&P 500. In low-appreciation markets (Dallas ~4.5%/yr, National ~4%/yr), 7%+ rates make leveraged real estate a poor trade vs stocks — interest cost consumes most of the appreciation gain. In high-appreciation coastal markets (Bay Area 7%+/yr, Seattle 6.5%/yr), leveraged purchases can still outperform even at 7% mortgage rates, though the margin narrows significantly compared to the 3–4% rate era of 2020–2022.

What is the difference between FHFA HPI and Case-Shiller HPI?

FHFA (Federal Housing Finance Agency) HPI tracks only homes with conforming mortgages (loan limits ~$766K in 2024), excluding cash sales and jumbo loans. S&P CoreLogic Case-Shiller HPI includes all arm's-length repeat sales, including cash and jumbo transactions. For high-cost coastal markets like San Francisco, Manhattan, and coastal Orange County — where median prices exceed conforming limits and cash and jumbo buyers are common — Case-Shiller is more representative. FHFA tends to understate appreciation in luxury markets. This calculator lets you toggle between both indexes.

Stocks vs. Real Estate: The Honest Answer Nobody Wants to Give You

About This Calculator

This free calculator compares S&P 500, NASDAQ, and 60/40 portfolio returns against real estate investment returns across 54 US locations from 1970 to 2025, with 2026 estimates. It uses FHFA House Price Index and S&P CoreLogic Case-Shiller HPI data alongside historical stock market return data to model five leverage scenarios: all-cash, 35% down, 30% down, 25% down, and 20% down. Rental mode adds NOI calculation, cap rate, IRS 27.5-year depreciation tax shield, property management, HOA, and vacancy. Up to three cash-out refinances can be modeled. Capital gains tax — including the $250K/$500K primary residence exclusion and 1031 exchange deferral — is calculated at sale. The wealth decomposition panel breaks down exactly where each dollar of return came from: price appreciation, leverage amplification, rental income, depreciation tax savings, and dividends.

Key Findings (1995–2025)

All-cash California real estate purchases from 1995 to 2025 generally underperformed the S&P 500 total return — averaged ~6–7%/yr appreciation vs S&P 500 ~10–11%/yr total return (1970–2025) — due to low rent yields (3–4%) and no leverage benefit. A 25%-down purchase in Orange County, Irvine, or Los Angeles in 1995 frequently matched or exceeded the S&P 500 on a total-wealth basis — leveraged equity CAGR ~12–15%/yr in coastal CA and WA markets (1995–2025) — driven by 5–7%/yr FHFA appreciation compounded on a 4× leveraged position plus the depreciation tax shield. Bay Area Peninsula markets — Atherton, Palo Alto, Los Altos, Menlo Park — delivered the highest leveraged returns in this dataset, with 7%+/yr FHFA CAGR 1995–2025. Texas markets (Dallas-Fort Worth, Southlake, Frisco) offer substantially higher rent yields (~6%) than California coastal but lower appreciation (~4–5%/yr), and ~2.1%/yr property tax is the largest cost drag. Miami and Florida statewide showed among the strongest recent appreciation — ~10%/yr Case-Shiller CAGR 2020–2025; moderate long-term at ~5%/yr since 1987 — with the Case-Shiller Miami index up over 60% from 2020–2025. Seattle and Bellevue delivered tech-driven appreciation of Case-Shiller Seattle ~6.5%/yr from 1990–2025; no state income tax reduces the depreciation shield value relative to CA or NY. Manhattan and Brooklyn real estate has appreciated at roughly 5–6%/yr since 1987 — highest transaction costs (~5–6%) of any market covered; NY's 50% combined tax rate maximizes the depreciation shield value.

States Covered

California (CA) — Prop 13 property tax (1.25% of purchase price, +2%/yr cap). Combined tax rate 44% (35% fed + 9.3% state). Improvement ratio ~40%. High home price-to-rent ratios make all-cash RE a long-term underperformer vs S&P 500; leveraged scenarios are competitive due to appreciation and depreciation shield.
Texas (TX) — Market-rate property tax ~2.1%/yr of assessed value. No state income tax (combined rate 35% fed). Higher rent yields than CA; improvement ratio ~70%. Strong job growth drives home price appreciation.
Florida (FL) — Homestead exemption applies to primary residences; rental properties taxed at ~1.1%/yr. No state income tax (35% fed). Coastal demand and migration from high-tax states support appreciation. Improvement ratio ~65%.
Washington (WA) — Property tax ~1.0%/yr. No state income tax (35% fed). Tech-driven demand in Seattle metro supports above-average home appreciation. Improvement ratio ~50%.
New York (NY) — Property tax ~1.7%/yr. Combined tax rate 50% (35% fed + 10.9% state + 3.9% NYC). Dense urban market; improvement ratio ~35% (land premium). Depreciation tax shield is most valuable here due to high marginal rate.
National average — Blended property tax ~1.1%/yr. Combined rate 38% (35% fed + 3% avg state). FHFA national home price index. Improvement ratio ~55%.

Markets Covered

California (24 locations): Orange County, Newport Beach, Irvine, Yorba Linda, Laguna Beach, Huntington Beach, Los Angeles, Beverly Hills, Santa Monica, Malibu, Pasadena, Manhattan Beach, San Diego, La Jolla, Del Mar, Rancho Santa Fe, Coronado, Carlsbad, San Francisco Bay Area, Palo Alto, Atherton, Los Altos, Menlo Park, Saratoga. Texas (7): Dallas-Fort Worth, Highland Park, University Park, Southlake, Frisco, Plano, Texas statewide. Florida (7): Miami, Miami Beach, Coral Gables, Key Biscayne, Coconut Grove, Brickell, Florida statewide. Washington (7): Seattle, Medina, Mercer Island, Bellevue, Kirkland, Redmond, Washington statewide. New York / New Jersey (7): New York City, Manhattan, Brooklyn, Hoboken, Scarsdale, Great Neck, New York statewide. Plus a US National average.

Data Sources

S&P 500 and NASDAQ historical returns: Damodaran (NYU Stern). 60/40 portfolio: S&P 500 + iShares 20+ Year Treasury Bond ETF (TLT). House price appreciation: FHFA All-Transactions House Price Index and S&P CoreLogic Case-Shiller metro indices via FRED: CSUSHPINSA (national), LXXRSA (LA), SDXRSA (SD), SFXRSA (SF), SEXRSA (Seattle), MIAXRSA (Miami), DAXRSA (Dallas), NYXRSA (NY). Mortgage rates: Freddie Mac PMMS. Rent growth: BLS CPI Rent of Primary Residence. Property tax rates: county assessor public records. Update cadence: stock indices (S&P 500, NASDAQ, TLT) and mortgage rates update monthly. FHFA HPI and S&P Case-Shiller indices update annually in March when Q4 and December data are published by FHFA and S&P (~last week of February). BLS CPI rent updates in January. Values marked (estimate) reflect projections pending official release.

关于本计算器

本计算器免费对比美国54个地区的房地产投资与标普500、纳斯达克及60/40投资组合的历史回报，数据覆盖1970年至2025年，含2026年预测。采用FHFA房价指数与标普CoreLogic凯斯-席勒指数，模拟五种杠杆方案：全现金、35%首付、30%首付、25%首付及20%首付。租赁模式包含净营业收入（NOI）、资本化率、IRS 27.5年折旧税盾、物业管理费、HOA及空置率。支持最多三次套现再融资。售出时计算资本利得税，含25万/50万美元自住房豁免及1031交换递延。财富分解面板逐项显示每一美元回报的来源：房价升值、杠杆放大、租金收入、折旧省税及股息。

主要发现（1995–2025年）

1995年至2025年，加州全现金购房总回报通常低于标普500——房价年化升值约6–7%，而标普500总回报约10–11%/年（1970–2025）——原因在于低租金回报率（3–4%）且无杠杆收益。若1995年以25%首付购置橙县、尔湾或洛杉矶房产，总财富往往与标普500持平甚至超越——加州及华盛顿州海岸杠杆权益年化回报约12–15%（1995–2025）——主要受5–7%/年FHFA升值率在4倍杠杆下的复利效应及折旧税盾驱动。湾区半岛市场（阿瑟顿、帕洛阿尔托、洛斯阿尔托斯、门洛帕克）是本数据集中杠杆回报最高的地区，1995–2025年FHFA年化增长率超过7%。德克萨斯市场（达拉斯-沃斯堡、南湖、弗里斯科）租金回报率（约6%）远高于加州海岸，但升值较低（约4–5%/年），约2.1%/年的房产税是最大成本拖累。迈阿密及佛罗里达整体近年升值最为显著——凯斯-席勒年化增长率2020–2025年约10%；自1987年以来长期年均约5%——凯斯-席勒迈阿密指数2020–2025年累计涨幅超60%。西雅图和贝尔维尤1990–2025年凯斯-席勒年化增长率约6.5%；无州所得税使折旧税盾价值低于加州或纽约。曼哈顿和布鲁克林自1987年以来年均升值约5–6%——交易成本最高（约5–6%）；纽约50%综合税率使折旧税盾价值最大化。

覆盖州份

加利福尼亚州（CA） — Prop 13房产税（购买价1.25%，年涨幅上限2%）。综合税率44%（联邦35% + 州9.3%）。改良价值比例约40%。高房价租金比使全现金房产长期跑输标普500；杠杆方案因升值和折旧税盾具有竞争力。
德克萨斯州（TX） — 房产税约评估价值2.1%/年。无州所得税（联邦35%）。租金回报率高于加州；改良比例约70%。就业增长推动房价升值。
佛罗里达州（FL） — 自住房适用免税额；出租房税率约1.1%/年。无州所得税（联邦35%）。海岸需求及人口迁入支撑升值。改良比例约65%。
华盛顿州（WA） — 房产税约1.0%/年。无州所得税（联邦35%）。西雅图都市区科技驱动需求支撑高于平均的房价升值。改良比例约50%。
纽约州（NY） — 房产税约1.7%/年。综合税率50%（联邦35% + 州10.9% + 纽约市3.9%）。高房价租金比；改良比例约35%（土地溢价）。折旧税盾因边际税率高而最具价值。
全国均值 — 综合房产税约1.1%/年。综合税率38%（联邦35% + 均州3%）。使用FHFA全国房价指数。改良比例约55%。

覆盖市场

加利福尼亚州（24个地区）：橙县、纽波特海滩、尔湾、约巴林达、拉古纳海滩、亨廷顿海滩、洛杉矶、比弗利山庄、圣莫尼卡、马里布、帕萨迪纳、曼哈顿海滩、圣迭戈、拉霍亚、德尔马、兰乔圣菲、科罗纳多、卡尔斯巴德、旧金山湾区、帕洛阿尔托、阿瑟顿、洛斯阿尔托斯、门洛帕克、萨拉托加。德克萨斯州（7个）：达拉斯-沃斯堡、高地公园、大学公园、南湖、弗里斯科、普莱诺、德克萨斯全州。佛罗里达州（7个）：迈阿密、迈阿密海滩、珊瑚阁、比斯坎礁、椰树林、布里克尔、佛罗里达全州。华盛顿州（7个）：西雅图、梅迪纳、默瑟岛、贝尔维尤、柯克兰、雷德蒙德、华盛顿全州。纽约/新泽西（7个）：纽约市、曼哈顿、布鲁克林、霍博肯、斯卡斯代尔、大颈、纽约全州。另含全美均值。

数据来源

标普500及纳斯达克历史回报：达摩达兰（纽约大学斯特恩商学院）。60/40组合：标普500 + iShares 20年以上国债ETF（TLT）。房价升值：FHFA全交易房价指数及标普CoreLogic凯斯-席勒都市区指数，来源FRED：CSUSHPINSA（全国）、LXXRSA（洛杉矶）、SDXRSA（圣迭戈）、SFXRSA（旧金山）、SEXRSA（西雅图）、MIAXRSA（迈阿密）、DAXRSA（达拉斯）、NYXRSA（纽约）。房贷利率：房地美初级抵押贷款市场调查。租金增长：美国劳工统计局CPI主要住所租金。房产税率：县评估局公开记录。更新节奏：股票指数（标普500、纳斯达克、TLT）及房贷利率每月更新。FHFA HPI及标普凯斯-席勒指数在每年3月Q4与12月数据由FHFA和标普正式发布后年度更新（通常2月最后一周）。美国劳工统计局CPI租金于1月更新。标注（估算）的数据为官方数据发布前的预测值。

The Last Chart To UnderstandReal Estate vs Stock Market