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If the price of the house rises faster than inflation, it is a good investment. However, rising faster than inflation also means that they become proportionally
by oppenh3imer 6y ago
If the price of the house rises faster than inflation, it is a good investment. However, rising faster than inflation also means that they become proportionally less affordable over time. You cannot have both affordable housing and high returns from housing
- dragonwriter 6y ago> You cannot have both affordable housing and high returns from housing Sure, you can, but only if real estate in established neighborhoods is more expensive than housing in new neighborhoods, which isn't hyperlocally sustainable but might be sustainable over a broader region.
- thebean11 6y agoYou sort of can, but it requires increasing density (so per square foot stays similar but those with low incomes can still afford a small place) or older neighborhoods becoming more expensive than newer neighborhoods (happens all the time).
- egsmi 6y agoIncreasing density likely implies displacing the people presently in the expensive neighborhood for construction. In the U.S. anyway, that’s easier said than done. So that’s definitely a theoretical solution but I’m not sure how practical it is.
- thebean11 6y agoDisplacing sure, but it's almost always voluntary! Zoning rules change, and developers start offering the big bucks for existing homeowners to sell. It's starting to happen in Austin: duplexes/fourplexes are getting built in some of the nicer, more central areas.
- adamredwoods 6y agoAlso, inflation causes the value of debt to decrease over time. (Wages are sticky, but when they catch up, inflation causes debt to go down as the value of currency decreases.)