[Long-term] By 2050, who will be wealthier: someone who buys 3 houses or someone who invests $130k in the stock market?

Here is a long-term, 30 year scenario comparing whether someone will be wealthier by buying and selling 3 houses of increasing value with $130k they plan to invest in the market.<br><br>The custom scenario outlined below was created by a Redditor in r/real-estate-investing using this stock market calculator. The scenario outlined below assumes the stock market will grow at 7% a year from 2024 to 2053. The results are below.<br><br>**Scenario 1 (investor):**<br><br>* Invest $130,000 in a diversified stock portfolio, investing no more additional money than the $130,000. <br>* The stock market will grow at 7% for 30 years. <br>* How much money will the stock investor have in 2053? <br><br>Or<br><br>**Scenario 2 (homeowner):**<br><br>* Invest $130,000 as a 7% down payment on a starter home worth $1.8M (single-family detached residence). <br>* After living in the starter home for 3 years, sell it and use the money to make a 7% down payment on a mid-level home worth $2.2M. At the time the starter home is sold, the value of the starter home has risen by 10% each year for the past 3 years from the original price of $1.8M, and the interest rate paid on the starter home is 7.5%. <br>* After living in the mid-level home for 3 years, sell it and use the money to make a 7% down payment on an luxury home worth $2.7M. At the time the mid-level home is sold, the value of the mid-level home has risen by 10% each year for the past 3 years from the original price of $2.2M, and the interest rate paid on the mid-level home is 8.5%. <br>* After living in the luxury home for 24 years, sell it and use the money to fund retirement. The luxury home appreciates by 3% a year for 24 years, and the interest rate paid on the luxury home is 9.5%. <br>* How much money will the homeowner have in 2053 (after selling the luxury home)? <br><br>**Stock Investor:** <br><br>The stock investor will have $640,050 in 2053.<br><br>**Homeowner:**<br><br>The homeowner will have $1,543,880 in 2053.<br><br>Based on these results, it looks like the homeowner will be wealthier than the stock investor by $900,000, despite the fact that the value of the starter, mid-level, and luxury homes grow at 10%, 10%, and 3% annual growth rates, while the stock market in the stock investor scenario grows at a 7% rate by comparison.<br><br>The luxury home in scenario #2 will have a 9.5% interest rate, while the starter and mid-level homes have 7.5% and 8.5% interest rates. <br><br>So in conclusion, if you plan to invest $130,000 in the stock market over the next 30 years, and you don't plan to touch the money until after 30 years have passed, you would be wealthier if you buy, sell, and trade up into 3 homes of increasing value than if you invest the $130,000 in the stock market. <br><br>**Edit:** I've been getting comments downvoting me because of a common misconception. Many are saying that the stock investor did not pay property taxes, insurance, or HOA fees because they were renting, while the homeowner did. This is simply not accurate, because the stock investor also had to pay property taxes, insurance, and HOA fees as a tenant, as these are factored into the landlord's rent prices, which is what the stock investor is paying.