3 ms·
Houses are depreciating assets. It's the land that has value most places.
by ska 8y ago
Houses are depreciating assets. It's the land that has value most places.
- TheGRS 8y agoJapan seems to be the exception actually, in the US houses certainly are appreciating assets, market crashes and such notwithstanding.
- ska 8y agoUsually the land they are on is appreciating. The houses themselves depreciate. Sometimes the distinction doesn't matter - but here one of the things we are talking about people knocking down serviceable houses to build new ones. This approach can sometimes even be compelling if land prices rise to a degree completely out of character with the homes originally built on them. See, for example, SF bay and Vancouver.
- ska 8y agoI seem to have been unclear, when I said "houses are depreciating assets" I meant the structure itself. This is almost always true. However, the land it is on may well be rising in value enough to counteract the depreciation - so your house + land may well be worth more in 10 years, even though the house itself is probably worth less. Make more sense?
- quickthrower2 8y agoThere are three things at play: 1. Value of land 2. Value of building in perfect order 3. Lost of value of building due to wear/tear etc. If building/trades costs are rising #2 can rise too while #3 will counteract it, and it depends how much money is put into maintenance and renovations. Notwithstanding cultural issues with old houses.
- ska 8y agoSee the "almost" in "almost always". You can reduce the depreciation of a depreciating asset by putting money into it, sure, but that doesn't counter the point. I agree there may be some weird inversions due to a spike in labor and/or material costs - but you wouldn't want to bet on it. The usual case is they are just losing value, and requiring injections of cash periodically.