> A good example of how the average person thinks financially... how many homeowners do you know that consider their home an "investment". Probably most, if not

> A good example of how the average person thinks financially... how many homeowners do you know that consider their home an "investment". Probably most, if not all. Homeowners are often legally required to sign a document agreeing that their home is not an investment. It not being an investment is mostly the fault of your local government(and, I suppose, of the local homeowners themselves who don't make it an issue). If cities removed all the non-hazard-related zoning laws, property values would mostly be tied to the expected cap rate. And this would happen whether or not homeowners knew how to calculate a cap rate. And valuing something based on its profit potential seems close to the definition of an investment. OTOH, this reduces the ratio of property owners to renters, who are less likely to care about property rights(I wonder if this is one reason the cities skew left?). So your city might end up like California if you did that, and something even worse than zoning might come along. Historically, only property owners could vote, which is one way to solve that problem; it's possible the modern approach is to segment a certain percentage of the population into SFHs. You could check that hypothesis by seeing how SFH-owners skew politically(I haven't done this). I don't actually know anyone who owns an SFH, isn't an investor, and considers their SFH to be an investment. So I'm speculating on their motivations.