Robert Brokamp

How to decide when to retire and updates from the housing market.

You're listening to the Saturday Personal Finance edition of Motley Fool Money.

I'm Robert Brokamp, and this week I speak with Motley Fool contributor Dan Kaplinger about how we're each determining when we can retire.

But first, here are some news items from last week, and they all have to do with housing.

First up, Redfin announced that more than 40,000 home purchase agreements were canceled in December.

That represents 16.3% of all homes that went under contract, the highest percentage of monthly cancellations since Redfin began tracking the metric in 2017.

One reason could be that home buyers are becoming more cautious amidst economic anxiety.

After all, the Michigan Consumer Sentiment Index is near its lowest level in 50 years, though it has ticked up a bit in recent months.

But another reason is that inventory has risen, giving potential homebuyers more choices.

According to Chen Zhao, head of economic research at Redfin, quote, End of quote.

This rise in inventory has weighed on prices, which brings us to our second item.

Last week, it was announced that the S&P Case-Shiller Home Price Index declined 0.1% in November and grew just 1.4% year over year.

That's a slowdown from what we've seen in recent years.

Home prices are up more than 50% since the pandemic, including double-digit gains in 2020 and 2021.

Such strong price growth over the past several years may have you wondering how real estate compares to the stock market.

Well, a recent article from the Bespoke Investment Group took a look and found that the 20-year return of the S&P Case-Shiller Index is actually just 3.1% per year on average.

That's about what long-term treasuries have returned over the same period and much less than the 10.8% annual return from the S&P 500.

Of course, with a house, you can benefit from leverage and not having to put all that money down at once.

On the other hand, a house has ongoing expenses like taxes, maintenance, and insurance.

Factor all those in, and studies show that home price appreciation tends to be just a bit above inflation.