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What modern finance theory are you referring to? We may be talking past each other. Owning equity in a business, either through the stock market or private own
by bretpiatt 7y ago
What modern finance theory are you referring to? We may be talking past each other.
Owning equity in a business, either through the stock market or private ownership, is different than a house. Simplistically the equity goes up in value as the business grows or goes down if it shrinks. A business is not a single fixed capital asset.
A house is a fixed asset that does not grow. In order for a house to increase in price you have fixed asset appreciation. If that appreciation increases in price faster than wage growth or inflation it's a good investment and it isn't as affordable in the future for the median wage earner.
- fsckboy 7y agoyour definition of "good investment" is not a workable definition because you're basing it a priori on the future outcome that you don't know yet: "if that appreciation increases in price faster than wage growth or inflation it's a good investment" What is a house's expected appreciation compared to inflation? that's all bound up in the "crowdsourced" current market price already. It's something else that makes a house a good investment, rather than your definition, and I tried to illustrate that in my first answer by pointing out that stocks are good investments without knowing precisely how individual stocks will perform in the future.