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Real estate is highly liquid? Compared to what? You'd be hard pressed to find many economists (or other well-informed individuals) who would consider real esta

Real estate is highly liquid? Compared to what? You'd be hard pressed to find many economists (or other well-informed individuals) who would consider real estate a currency. Though at some point we're just debating semantics. Edit: Also, real estate is extremely non-fungible, as individual instances of the asset class are not easily interchangeable.

Jtsummers 11y ago
And unless you have dozens or hundreds or thousands of acres, you can't subdivide it effectively. Let's say your property is worth $100,000. How do you get only $50,000 worth of value out of it? You have to sell the whole thing, do you then convert the remaining $50k to some other real estate? I suppose you can take out a second (third/fourth/fifth) mortgage on it for the desired value, but then you're stuck paying back that loan. So the property hasn't really provided you any direct value, just collateral to back your debts. It's a value store, but hardly a currency.
- mrfusion 11y ago
  Home equity loans, friend!
  - Jtsummers 11y ago
    Exactly. The house/real estate isn't the currency, it's the asset backing the currency. When we had the gold standard in the US, gold was not our currency. It was the asset backing our currency (strictly speaking, you weren't going to go into a corner store with $0.10 worth of gold to pay for your bottle of coke, though I suppose you could've). Gold is simply too impractical to use as the currency directly. You have to back something like that with certificates. IN the case of a commodity like gold it's easy to accumulate those certificates into an amount that's actually worth exchanging for raw gold. But with real estate? How am I going to practically claim 100 sq ft of prime lakeside real estate?
    - qubex 11y ago
      Quite amusingly the Weimar Republic quelled hyperinflation by rebasing the deflated currency on a limited asset... land. The new mark stabilised (until the Wall Street Crash, at least).
qubex 11y ago
It is my understanding that vacancy rates have plunged and that a given property is never on the market for very long before a sale is achieved. This makes it unusually liquid for a real estate market.

Jtsummers 11y ago

And unless you have dozens or hundreds or thousands of acres, you can't subdivide it effectively. Let's say your property is worth $100,000. How do you get only $50,000 worth of value out of it? You have to sell the whole thing, do you then convert the remaining $50k to some other real estate? I suppose you can take out a second (third/fourth/fifth) mortgage on it for the desired value, but then you're stuck paying back that loan. So the property hasn't really provided you any direct value, just collateral to back your debts. It's a value store, but hardly a currency.

mrfusion 11y ago
Home equity loans, friend!
- Jtsummers 11y ago
  Exactly. The house/real estate isn't the currency, it's the asset backing the currency. When we had the gold standard in the US, gold was not our currency. It was the asset backing our currency (strictly speaking, you weren't going to go into a corner store with $0.10 worth of gold to pay for your bottle of coke, though I suppose you could've). Gold is simply too impractical to use as the currency directly. You have to back something like that with certificates. IN the case of a commodity like gold it's easy to accumulate those certificates into an amount that's actually worth exchanging for raw gold. But with real estate? How am I going to practically claim 100 sq ft of prime lakeside real estate?
  - qubex 11y ago
    Quite amusingly the Weimar Republic quelled hyperinflation by rebasing the deflated currency on a limited asset... land. The new mark stabilised (until the Wall Street Crash, at least).

qubex 11y ago

It is my understanding that vacancy rates have plunged and that a given property is never on the market for very long before a sale is achieved. This makes it unusually liquid for a real estate market.