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The weird thing about house prices is it’s the exact same house that now costs waaaay more. What I mean is, for example, my house is 130 years old. So it’s in

The weird thing about house prices is it’s the exact same house that now costs waaaay more. What I mean is, for example, my house is 130 years old. So it’s in a _worse_ state than it was 20 years ago. But it costs probably 10 X more. It’s not like houses are a fine wine that matures. Nor is it in any way upgraded or better like a new technology would be. But up in cost they go, indefinitely. Exponentially. Pointlessly. A complete and utter failure of policy.

tibiahurried 5y ago
What's 10x is not the house, but the land, the physical space the house seats on. The land is a finite resource, thus it can only appreciate in value.
- baq 5y ago
  Only if population grows. Land will depreciate if there are less people to live on it.
  - snidane 5y ago
    In the 21st century, even if country population stagnates or even drops, population still grows in cities compared to rural areas.
- liketochill 5y ago
  Not just land, but land in desirable places with amenities like roads, sewer, water, power, schools, food stores near by.
- Spooky23 5y ago
  Only if the capital is available. Speculators tend to use borrowed money to do their thing and drive prices up. Good times until they’re not, then boom. I have family who made a fortune off the backs of people living under this delusion in the 1980s and the 1960s.
- batshit_beaver 5y ago
  To add to this, it's not even necessarily true that the value of land itself is up 10x. It could very well be that the value of dollar is DOWN 10x. The effect on price tag is exactly the same.
  - imtringued 5y ago
    By that logic the value of all consumer goods is down by almost 10x as well.
- nickff 5y ago
  >"The land is a finite resource, thus it can only appreciate in value." This is a non-sequitur; lots of things are limited, but often collapse in value. As a former Saudi energy minister once said: 'the stone age ended, but not for lack of stones'.
  - max47 5y ago
    land is the one thing almost never goes down because we can't create more of it. for almost every other aspect of our lives, they are alternative solution to the problem but you can't create more land. Building vertical to increase density is only kicking the can down the road in a context where the humain population is always increasing.
    - jpetso 5y ago
      Well, apparently worldwide population will peak sometime and then slowly fall. The mitigating factor being that it probably won't happen in most of our lifetimes yet. That said, some countries might experience their population plateauing sooner than others. So perhaps if we kick the can down the road for a while longer, it will indeed have been enough.
      - max47 5y ago
        > That said, some countries might experience their population plateauing sooner than others And all of these countries (except japan/Switzerland) are planning to bring more immigrants in to make sure the population is always increasing faster. Something that most people in first world countries don't realise is that the entire population of their country is smaller than the number of millionaires in china+india. Even if all if america+EU became sterile, there would still be enough foreigners to buy more unit and push the bubble further if they open borders. And they would, because the entire economy depends on it.
MathYouF 5y ago
If everyone lived with their siblings in the same house they grew up in, we wouldn't have a problem. As is, people have children who occupy a cumulative more houses with or without others than their parents/grandparents did, and there's not more land being made. So that's why the old land and what's on it go up in value. Basically, the increasing population (demand) is the cause of an asset increasing in value despite not increasing in quality. One can make policies which reduces the number people who wish to use homes in the domestic market of a given country if they want to prevent that from happening without expanding the supply massively instead, that may lead to other negative externalities though based on which method is chosen (birth limits, immigration controls, ect.).
baq 5y ago
On the contrary, it’s demographics. If you had any land, as long as more people want to live on it, the price goes up. If there are more people full stop, land goes up more, because there’s more people to at the bid. Now whether anyone should be allowed to own land is a good question. Lots of folks can’t even imagine a world where that’s impossible, but ownership is just law, a social construct.
enaaem 5y ago
It’s not the house that’s worth more. It’s the land. If cities and towns develops, land prices should go up. Buildable land near an office, supermarket and bar should be worth more than the same piece in the middle of nowhere.
- closeparen 5y ago
  To steal a phrase from Matt Yglesias: we only have so much "throughput" from land prices to housing prices because we refuse to build vertically.
  - batshit_beaver 5y ago
    Slight correction - people don't want to live in vertically built accommodations. Everyone wants a nice little house they don't share with anyone. Can't exactly blame them.
    - deleted 5y ago
      [deleted]
    - closeparen 5y ago
      I don't think that's true. Obviously a lot of people pay a lot of money for them. I think even the most craven NIMBY would adore a high rise condo if it had comparable square footage. It's everyone else's vertically built accommodations that attract the hatred.
    - wallacoloo 5y ago
      i just have trouble understanding this angle. i grew up in the suburbs and moved into the city during year 2 of my career. i rent a home with 3 roommates even though i could afford that SFH you’re describing. why does a person desire to live in the city for any reason besides for the density? “jobs”, “good food”, “nightlife”, “dating” and “social opportunities” are all things i hear. the last two are a direct result of density. the first 3 are only possible as indirect results. anecdotally, the price per sqft of townhomes exceeds that of detached homes in several Seattle neighborhoods. several confounding factors, including the year of the building, but in general that suggests a preference opposite to what you claim. or at least, that, in the face of constricted supply we can’t really tell where the preferences truly lie.
Dumblydorr 5y ago
I'd disagree that houses are the same as they used to be. There's a spectrum of housing from from degraded to new to renovated. But the ideal house today, compared to the past, today's house has so many more luxuries and conveniences: appliances, energy efficiency, air quality, amount and variety of lighting, safety standards and knowledge of advanced materials, there's literally no system that you can't improve in a house. Even the humble hand made log cabin could be outfitted with an efficient modern solar battery system with a precisely engineered woodstove to boot. All this to say, many houses are upgraded over time, not merely degraded. I'd much rather live in my house now after the decades of upgrades than when it was freshly made in the 70s.
Spooky23 5y ago
I think you’re confusing depreciation with value. In most cases every 20 year increment backward yields a higher quality house. Newer houses are garbage in many dimensions. An older home requires a little more capital investment, but if it has lasted 130 years, it’s sound and could be remade/modernized at a cost well below any new construction.
sharemywin 5y ago
it's also replacement cost. to build a new house would require a ton of money.
Tiktaalik 5y ago
Others have mentioned the underlying land values is the most important thing that is driving valuation increases, but beyond that the existing 130 year old house is worth more because the cost to rebuild it from scratch is increasing as construction costs increase.
seanmcdirmid 5y ago
Japan is different in this regard: housing actually depreciates, it is understood that it will be rebuilt every 20-40 years, and if it is a condo or some kind of apartment, there isn't much share of land appreciation to count on. That is why Tokyo is considered to be more affordable than NYC.

tibiahurried 5y ago

What's 10x is not the house, but the land, the physical space the house seats on. The land is a finite resource, thus it can only appreciate in value.

baq 5y ago
Only if population grows. Land will depreciate if there are less people to live on it.
- snidane 5y ago
  In the 21st century, even if country population stagnates or even drops, population still grows in cities compared to rural areas.
liketochill 5y ago
Not just land, but land in desirable places with amenities like roads, sewer, water, power, schools, food stores near by.
Spooky23 5y ago
Only if the capital is available. Speculators tend to use borrowed money to do their thing and drive prices up. Good times until they’re not, then boom. I have family who made a fortune off the backs of people living under this delusion in the 1980s and the 1960s.
batshit_beaver 5y ago
To add to this, it's not even necessarily true that the value of land itself is up 10x. It could very well be that the value of dollar is DOWN 10x. The effect on price tag is exactly the same.
- imtringued 5y ago
  By that logic the value of all consumer goods is down by almost 10x as well.
nickff 5y ago
>"The land is a finite resource, thus it can only appreciate in value." This is a non-sequitur; lots of things are limited, but often collapse in value. As a former Saudi energy minister once said: 'the stone age ended, but not for lack of stones'.
- max47 5y ago
  land is the one thing almost never goes down because we can't create more of it. for almost every other aspect of our lives, they are alternative solution to the problem but you can't create more land. Building vertical to increase density is only kicking the can down the road in a context where the humain population is always increasing.
  - jpetso 5y ago
    Well, apparently worldwide population will peak sometime and then slowly fall. The mitigating factor being that it probably won't happen in most of our lifetimes yet. That said, some countries might experience their population plateauing sooner than others. So perhaps if we kick the can down the road for a while longer, it will indeed have been enough.
    - max47 5y ago
      > That said, some countries might experience their population plateauing sooner than others And all of these countries (except japan/Switzerland) are planning to bring more immigrants in to make sure the population is always increasing faster. Something that most people in first world countries don't realise is that the entire population of their country is smaller than the number of millionaires in china+india. Even if all if america+EU became sterile, there would still be enough foreigners to buy more unit and push the bubble further if they open borders. And they would, because the entire economy depends on it.

MathYouF 5y ago

If everyone lived with their siblings in the same house they grew up in, we wouldn't have a problem. As is, people have children who occupy a cumulative more houses with or without others than their parents/grandparents did, and there's not more land being made. So that's why the old land and what's on it go up in value. Basically, the increasing population (demand) is the cause of an asset increasing in value despite not increasing in quality. One can make policies which reduces the number people who wish to use homes in the domestic market of a given country if they want to prevent that from happening without expanding the supply massively instead, that may lead to other negative externalities though based on which method is chosen (birth limits, immigration controls, ect.).

baq 5y ago

On the contrary, it’s demographics. If you had any land, as long as more people want to live on it, the price goes up. If there are more people full stop, land goes up more, because there’s more people to at the bid. Now whether anyone should be allowed to own land is a good question. Lots of folks can’t even imagine a world where that’s impossible, but ownership is just law, a social construct.

enaaem 5y ago

It’s not the house that’s worth more. It’s the land. If cities and towns develops, land prices should go up. Buildable land near an office, supermarket and bar should be worth more than the same piece in the middle of nowhere.

closeparen 5y ago
To steal a phrase from Matt Yglesias: we only have so much "throughput" from land prices to housing prices because we refuse to build vertically.
- batshit_beaver 5y ago
  Slight correction - people don't want to live in vertically built accommodations. Everyone wants a nice little house they don't share with anyone. Can't exactly blame them.
  - deleted 5y ago
    [deleted]
  - closeparen 5y ago
    I don't think that's true. Obviously a lot of people pay a lot of money for them. I think even the most craven NIMBY would adore a high rise condo if it had comparable square footage. It's everyone else's vertically built accommodations that attract the hatred.
  - wallacoloo 5y ago
    i just have trouble understanding this angle. i grew up in the suburbs and moved into the city during year 2 of my career. i rent a home with 3 roommates even though i could afford that SFH you’re describing. why does a person desire to live in the city for any reason besides for the density? “jobs”, “good food”, “nightlife”, “dating” and “social opportunities” are all things i hear. the last two are a direct result of density. the first 3 are only possible as indirect results. anecdotally, the price per sqft of townhomes exceeds that of detached homes in several Seattle neighborhoods. several confounding factors, including the year of the building, but in general that suggests a preference opposite to what you claim. or at least, that, in the face of constricted supply we can’t really tell where the preferences truly lie.

Dumblydorr 5y ago

I'd disagree that houses are the same as they used to be. There's a spectrum of housing from from degraded to new to renovated. But the ideal house today, compared to the past, today's house has so many more luxuries and conveniences: appliances, energy efficiency, air quality, amount and variety of lighting, safety standards and knowledge of advanced materials, there's literally no system that you can't improve in a house. Even the humble hand made log cabin could be outfitted with an efficient modern solar battery system with a precisely engineered woodstove to boot. All this to say, many houses are upgraded over time, not merely degraded. I'd much rather live in my house now after the decades of upgrades than when it was freshly made in the 70s.

Spooky23 5y ago

I think you’re confusing depreciation with value. In most cases every 20 year increment backward yields a higher quality house. Newer houses are garbage in many dimensions. An older home requires a little more capital investment, but if it has lasted 130 years, it’s sound and could be remade/modernized at a cost well below any new construction.

sharemywin 5y ago

it's also replacement cost. to build a new house would require a ton of money.

Tiktaalik 5y ago

Others have mentioned the underlying land values is the most important thing that is driving valuation increases, but beyond that the existing 130 year old house is worth more because the cost to rebuild it from scratch is increasing as construction costs increase.

seanmcdirmid 5y ago

Japan is different in this regard: housing actually depreciates, it is understood that it will be rebuilt every 20-40 years, and if it is a condo or some kind of apartment, there isn't much share of land appreciation to count on. That is why Tokyo is considered to be more affordable than NYC.