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Pretty much every capital asset depreciates. Even with basic maintenance everything wears out over time. Only legal entities are immune from the ravages of time

Pretty much every capital asset depreciates. Even with basic maintenance everything wears out over time. Only legal entities are immune from the ravages of time.

chrisseaton 4y ago
> Even with basic maintenance everything wears out over time. There's basic ongoing maintenance yeah, but I don't think that counts as deprecation in any sensible way does it? If you keep your oil paintings in a mouldy cupboard they'll rot, but we don't say art is a deprecating asset because of this. You just make sure they don't rot and clean them every now and again. Houses can stand for hundreds and hundreds of years. As they get older they get more valuable because people like older buildings for aesthetic reasons.
- CogitoCogito 4y ago
  > As they get older they get more valuable because people like older buildings for aesthetic reasons. Is this really true in general? I mean sure I can find examples of it being true, but it's kind of assumed that many of the old houses in my parent's neighborhood of San Diego are teardowns whenever a buyer comes interested.
  - synu 4y ago
    Maybe it’s something with the way houses are built there? I am in a smaller old city in Europe and I’d say the majority of houses around me are about as old as the US, or a little older, and it’s not all about to fall down (or even close).
- RhysU 4y ago
  > If you keep your oil paintings in a mouldy cupboard they'll rot, but we don't say art is a deprecating asset because of this. The house fundamentally is in a "moldy cupboard". Its entire purpose is to provide shelter from the "mold".
s1artibartfast 4y ago
My house has appreciated 500x since construction. Strange
- jjav 4y ago
  Where is this? So if it was 20K new, it's 10M now?
  - s1artibartfast 4y ago
    Bay area. Built a little more than 100 years ago and was 3K new and now worth 1.5M. Inflation would only be an 30x increase from 3k to 90K
  - chrisseaton 4y ago
    How much do you think it cost to build houses a couple hundred years ago?
    - s1artibartfast 4y ago
      In some places it was and times, it was literally free. The government would give you the land and you would build a house using your own labor and materials on that land
synu 4y ago
My house was built in 1650 and doesn’t take much maintenance at all. Definitely not more than the equivalent in rent I’d pay for it.
- giaour 4y ago
  > 1650 I don't think your house is representative of the US housing market. I once lived in an apartment in a 17th century masonry building in Alsace, and it didn't seem to give my landlord nearly as much grief as my parents' 1960s-era suburban home in Houston did to them.
  - synu 4y ago
    Sure, just mentioning that it is possible to build a house that lasts a long time. There isn’t some law of nature that prevents it.
    - giaour 4y ago
      True, but houses like that are far more expensive to build today. I'm not sure you could "flip" a new home built with traditional masonry since it would require a larger upfront investment. (Edit to add: the normal American usage of "flip" (buying a degraded property, fixing it up, and reselling) is also not really applicable to houses in move-in-ready condition.) The original construction costs will probably have been recouped after 370 years of continuous occupancy, though. :)
RHSeeger 4y ago
I guess my problem with this statement is that, if you can sell the asset for more than <cost to buy + cost to maintain>, has it really depreciated? And, excluding external factors (ex, the area the house is in has declined), this has been possible to do in most areas for longer than I've been alive; half a century at least.
s1artibartfast 4y ago
Land is a pretty significant exception to this, and extremely relevant to the topic of housing.

Pretty much every capital asset depreciates. Even with basic maintenance everything wears out over time. Only legal entities are immune from the ravages of time.

chrisseaton 4y ago

> Even with basic maintenance everything wears out over time. There's basic ongoing maintenance yeah, but I don't think that counts as deprecation in any sensible way does it? If you keep your oil paintings in a mouldy cupboard they'll rot, but we don't say art is a deprecating asset because of this. You just make sure they don't rot and clean them every now and again. Houses can stand for hundreds and hundreds of years. As they get older they get more valuable because people like older buildings for aesthetic reasons.

CogitoCogito 4y ago
> As they get older they get more valuable because people like older buildings for aesthetic reasons. Is this really true in general? I mean sure I can find examples of it being true, but it's kind of assumed that many of the old houses in my parent's neighborhood of San Diego are teardowns whenever a buyer comes interested.
- synu 4y ago
  Maybe it’s something with the way houses are built there? I am in a smaller old city in Europe and I’d say the majority of houses around me are about as old as the US, or a little older, and it’s not all about to fall down (or even close).
RhysU 4y ago
> If you keep your oil paintings in a mouldy cupboard they'll rot, but we don't say art is a deprecating asset because of this. The house fundamentally is in a "moldy cupboard". Its entire purpose is to provide shelter from the "mold".

s1artibartfast 4y ago

My house has appreciated 500x since construction. Strange

jjav 4y ago
Where is this? So if it was 20K new, it's 10M now?
- s1artibartfast 4y ago
  Bay area. Built a little more than 100 years ago and was 3K new and now worth 1.5M. Inflation would only be an 30x increase from 3k to 90K
- chrisseaton 4y ago
  How much do you think it cost to build houses a couple hundred years ago?
  - s1artibartfast 4y ago
    In some places it was and times, it was literally free. The government would give you the land and you would build a house using your own labor and materials on that land

synu 4y ago

My house was built in 1650 and doesn’t take much maintenance at all. Definitely not more than the equivalent in rent I’d pay for it.

giaour 4y ago
> 1650 I don't think your house is representative of the US housing market. I once lived in an apartment in a 17th century masonry building in Alsace, and it didn't seem to give my landlord nearly as much grief as my parents' 1960s-era suburban home in Houston did to them.
- synu 4y ago
  Sure, just mentioning that it is possible to build a house that lasts a long time. There isn’t some law of nature that prevents it.
  - giaour 4y ago
    True, but houses like that are far more expensive to build today. I'm not sure you could "flip" a new home built with traditional masonry since it would require a larger upfront investment. (Edit to add: the normal American usage of "flip" (buying a degraded property, fixing it up, and reselling) is also not really applicable to houses in move-in-ready condition.) The original construction costs will probably have been recouped after 370 years of continuous occupancy, though. :)

RHSeeger 4y ago

I guess my problem with this statement is that, if you can sell the asset for more than <cost to buy + cost to maintain>, has it really depreciated? And, excluding external factors (ex, the area the house is in has declined), this has been possible to do in most areas for longer than I've been alive; half a century at least.

s1artibartfast 4y ago

Land is a pretty significant exception to this, and extremely relevant to the topic of housing.