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If new supply outpaces demand, wouldn't housing also in that case cease to be a good investment? (I think your first sentence has this wrong)
by xvedejas 6y ago
If new supply outpaces demand, wouldn't housing also in that case cease to be a good investment? (I think your first sentence has this wrong)
- missedthecue 6y agoHousing is consumption, by definition. A house doesn't produce anything. It shouldn't be a good investment. It's probably optimal for it to rise at the same rate of inflation over time, to ensure that people aren't immediately under water on their mortgages, and so that they become cheaper relative to median incomes over the long term.
- chewbacha 6y agoWhile it makes sense that it should basically grow with inflation, I think that housing does arguably produce humans. Humans which work and drive the economy. This would imply that it should rise with inflation of course.
- beebmam 6y agoHousing in the US can be seen as a luxury good as well. I really don't like that
- WarOnPrivacy 6y agoGiven our enormous homeless population, that would seem to apply here.
- AndrewUnmuted 6y agoHow about the land that the house sits upon? That's a scarce resource for which demand will continue to rise over time. I envision no way for this to change until we figure out a new way to house people in previously-uninhabitable spaces.
- whyenot 6y agoIt seems like you are assuming that population will continue to increase. Obviously it is not something that can happen forever.
- chongli 6y agoA house is consumption and it’s not a good investment. The value is in the land. Land in popular areas is extremely valuable and increasing in value all the time. Yes, homeowners collude to restrict housing supply via regional politics. But the real problem is the centralization of jobs within big cities. This is bound up in the history of manufacturing in the west and the forces of globalization. Remote work has the chance to reverse or at least slow this trend. In the short term it may lead to an explosion in real estate prices in areas within commuting distance of the big cities. In the long term I hope it leads to people spreading out a lot more and making housing affordable again.
- joshlemer 6y agoI don't think the centralization of jobs is really the whole story or even close to it. If you look at BC in Canada, housing is ridiculously expensive, even at distances away from Vancouver and Victoria that would prohibit commuting for work, and even despite BC being mostly empty wilderness with plenty of room for every Canadian to move there.
- lotsofpulp 6y agoLand in BC has higher demand due to favorable weather and topography, relative to land in other areas.
- rhodozelia 6y agoWhat if you rent the house out? Can it be an investment then? It would produce a return, positive or negative depending on your costs and the rent you can charge.
- deleted 6y ago[deleted]
- stjohnswarts 6y agoThis is false. A house allows shelter which drastically increases human output and sense of well being, which is also good for production and consumption if you want to look at it from a strictly economic angle. I'm not sure where you're going with that. You can't make sure a mortgage will put you underwater, that's an impossibility in an economy that isn't completely state controlled.
- jes 6y agoMy wife and I owned a home in a nice community for 35 years. We lived our lives and raised our family in that home. It produced great value for us, year after year, for much of our lives. The claim that a house doesn't produce anything seems incorrect to me.
- TheTrotters 6y agoYes, that’s the point!