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Those things are not the same though! Cars and Houses do not perform in the same way financially. Houses tend to increase in value, Cars tend to decline in va
by firecall 4y ago
Those things are not the same though!
Cars and Houses do not perform in the same way financially.
Houses tend to increase in value, Cars tend to decline in value.
There are, of course, outliers in both markets.
- imtringued 4y agoHouses wear down just like cars. They behave exactly the same way.
- dgoldstein0 4y ago> Houses tend to increase in value, Cars tend to decline in value. this is an observation that may be mostly supported by data right now, but also is not super meaningful. WHY do houses appreciate? why do cars depreciate? The answer is supply and demand: supply of housing is far more regulated than supply of cars - height limits and zoning are frequent reasons, but any sort of building approval process with unnecessary hurdles can increase supplier risk and cost. Most of these processes aren't set up with demand in mind. whereas if you are an automaker and want to churn out another 10000 cars, there's no laws stopping you (fuel efficiency / emissions requirements notwithstanding). The problem with houses is that since a large portion of the population thinks they are investments, anything that would increase supply would devalue their investment, so fixing the regulations around them is a political quagmire. I suppose cars, as machines, also have increasing maintenance costs over time. the same is true of houses, just over a much longer timescale... if houses depreciated instead of appreciated, we might see more torn down after 30-50 years rather than always repairing everything. Certainly the tradeoffs would start to look different.
- QIYGT 4y ago> Houses tend to increase in value They don't have to. This happens when an area gets popular and zoning regulations don't allow enough new supply to meet the demand.
- BenFranklin100 4y agoSorry, but no. Land sometimes appreciate in value. The homes built on the land nearly always depreciate in value. And when land appreciates in value (aka by being near schools, hospitals, and well-paying jobs), we distribute the higher cost of the land among multiple homes by building taller, denser types of housing. This is presently illegal in much of the US however.
- seanmcdirmid 4y agoMany SFH's here in Seattle are being torn down to build multiple 3 story town homes with no yards and rooftop decks (I live in one). They still go for a million, but there are plenty of people here with that purchasing power to buy them. Still cheaper than a 2 bedroom apartment in Beijing.
- BenFranklin100 4y agoYep, tell me about. Part of the reason is that the market is still out of whack from decades of under-building. However, the bigger reason is that new homes have always been relatively expensive. The construction costs have to be immediately recouped for one thing, and they’re often located in more desirable areas. The beauty of new homes is that they give the Amazon tech bro something to buy instead of coming into your neighborhood and bidding up the price of the older homes. That’s the good things about new homes: They help keep old homes cheaper.
- seanmcdirmid 4y ago> Part of the reason is that the market is still out of whack from decades of under-building. In the USA, anyways, many people left the home construction industry after the 2008 crash, and didn't come back when things picked up again. That means...no apprentices were trained up, experience was lost, etc...so labor costs have shot through the roof because experience is quite limited. And try even renovating an old home! You get quotes of like $150k just to do a kitchen.
- alvah 4y agoLand in desirable areas with permission to build houses on it tends to increase in value. In most cases the house itself is a depreciating asset.