4 ms·

Yes, but as soon as you buy one you will want housing prices to go up, just like any investment.

by jmagoon 11y ago

bunderbunder 11y ago
Especially so for an investment like housing, where rapid growth due to a shift in the popularity of your neighborhood is about the only reliable way for your "investment" to fare much better than sticking money under the mattress would. Sorry for the barb, but that meme (your house as an investment) really bothers me, because it has the potential to do a lot of damage. It's like penny stocks. Sure you can make money if you really know what you're doing or get lucky, but by and large the idea that it's a good investment originates with people who've a financial interest in convincing you to buy some.
- djrogers 11y ago
  >rapid growth due to a shift in the popularity of your neighborhood is about the only reliable way for your "investment" to fare much better than sticking money under the mattress would Pretty shortsighted view there, and demonstrably wrong. Historically housing prices have always risen faster than the rate of inflation - both in 'popular'neighborhoods and elsewhere. Take almost any 10 year period of time and you'd be very very hard pressed to find a region where housing prices didn't dramatically outpace inflation.
  - avn2109 11y ago
    Is this true in all countries, or just the ones (like my country, the USA) where the real estate market is rigged by various government/incumbent entities?
  - bunderbunder 11y ago
    Yes, but if you're looking at them as an investment then you need to look at the overall picture. Just looking at prices over time is interesting, but it doesn't give the financial picture from the perspective of a homeowner because it ignores taxes, maintenance and repairs. Once all that's factored in the picture tends to get a lot less rosy. For example, over the past 25 years the average price of a US home has grown by about 14% in real terms. I'm too lazy to calculate out what that would be as an annual percentage rate, but it's definitely lower than the average US property tax rate, which I believe is a smidge under 1%. So already, even without considering other expenses, houses tend to be gradual money losers on average.
supster 11y ago
Exactly, so many people seem to forget this simple fact
- revelation 11y ago
  This doesn't seem like a "simple fact", rather insanity that has caused many of the economical problems we have seen recently. I don't buy a house expecting to use it 10+ years and still make a buck selling it afterwards. The same way I don't buy a car and expect it to yield me money when it's a broken beater, in fact, the simple fact of buying it immediately devalues it (to others). (I guess this is because (1) the market and tax situation in the US are broken and (2) it causes the land to be vastly more valuable than whatever is standing on top of it)
  - supster 11y ago
    The larger point was that incentives flip as soon as you become a homeowner. As a renter, you are hoping for housing prices to go down and would like to see this happen via increased housing supply, deregulation, or even a local economic downturn as someone suggested above. But as soon as you become a homeowner, you want housing prices to level or increase because a large portion of your net worth is tied to it. So you suddenly want new housing supply to shrink, increased developmental regulations, and a booming economy in your area.
untog 11y ago
A house is more than just an investment, though. It's, you know, the place you live. The catchment area for the schools your kids go to. The hospitals you have access to. And so on.
- wdmeldon 11y ago
  This is hugely important for "normal" people. Most people have care a lot more about the value of their house not going down than not going up. Breaking even on a house is find because it provides roof over your head.
PretzelPirate 11y ago
Eventually. I'd personally love it is my house stopped increasing in value so I can pay lower property taxes. My value went up over $100k in the first year after I bought it.

Yes, but as soon as you buy one you will want housing prices to go up, just like any investment.

by jmagoon 11y ago

Yes, but as soon as you buy one you will want housing prices to go up, just like any investment.

Especially so for an investment like housing, where rapid growth due to a shift in the popularity of your neighborhood is about the only reliable way for your "investment" to fare much better than sticking money under the mattress would. Sorry for the barb, but that meme (your house as an investment) really bothers me, because it has the potential to do a lot of damage. It's like penny stocks. Sure you can make money if you really know what you're doing or get lucky, but by and large the idea that it's a good investment originates with people who've a financial interest in convincing you to buy some.

djrogers 11y ago
>rapid growth due to a shift in the popularity of your neighborhood is about the only reliable way for your "investment" to fare much better than sticking money under the mattress would Pretty shortsighted view there, and demonstrably wrong. Historically housing prices have always risen faster than the rate of inflation - both in 'popular'neighborhoods and elsewhere. Take almost any 10 year period of time and you'd be very very hard pressed to find a region where housing prices didn't dramatically outpace inflation.
- avn2109 11y ago
  Is this true in all countries, or just the ones (like my country, the USA) where the real estate market is rigged by various government/incumbent entities?
- bunderbunder 11y ago
  Yes, but if you're looking at them as an investment then you need to look at the overall picture. Just looking at prices over time is interesting, but it doesn't give the financial picture from the perspective of a homeowner because it ignores taxes, maintenance and repairs. Once all that's factored in the picture tends to get a lot less rosy. For example, over the past 25 years the average price of a US home has grown by about 14% in real terms. I'm too lazy to calculate out what that would be as an annual percentage rate, but it's definitely lower than the average US property tax rate, which I believe is a smidge under 1%. So already, even without considering other expenses, houses tend to be gradual money losers on average.

supster 11y ago

Exactly, so many people seem to forget this simple fact

revelation 11y ago
This doesn't seem like a "simple fact", rather insanity that has caused many of the economical problems we have seen recently. I don't buy a house expecting to use it 10+ years and still make a buck selling it afterwards. The same way I don't buy a car and expect it to yield me money when it's a broken beater, in fact, the simple fact of buying it immediately devalues it (to others). (I guess this is because (1) the market and tax situation in the US are broken and (2) it causes the land to be vastly more valuable than whatever is standing on top of it)
- supster 11y ago
  The larger point was that incentives flip as soon as you become a homeowner. As a renter, you are hoping for housing prices to go down and would like to see this happen via increased housing supply, deregulation, or even a local economic downturn as someone suggested above. But as soon as you become a homeowner, you want housing prices to level or increase because a large portion of your net worth is tied to it. So you suddenly want new housing supply to shrink, increased developmental regulations, and a booming economy in your area.

untog 11y ago

A house is more than just an investment, though. It's, you know, the place you live. The catchment area for the schools your kids go to. The hospitals you have access to. And so on.

wdmeldon 11y ago
This is hugely important for "normal" people. Most people have care a lot more about the value of their house not going down than not going up. Breaking even on a house is find because it provides roof over your head.

PretzelPirate 11y ago

Eventually. I'd personally love it is my house stopped increasing in value so I can pay lower property taxes. My value went up over $100k in the first year after I bought it.