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Why should it be an attractive financial asset if you do live there? Why shouldn't it just be a depreciating asset like a car (which it would be if land was tax

Why should it be an attractive financial asset if you do live there? Why shouldn't it just be a depreciating asset like a car (which it would be if land was taxed effectively)? That way, we could invest in productive assets instead of land.

trashtester 4y ago
> That way, we could invest in productive assets instead of land. Housing is worse than "land". The building itself is inherently depreciating, yet many think that they "invest" when they get a new kitchen or bathroom.
- true_religion 4y ago
  You can invest in depreciating assets, if you sell them for higher than the cost of your investment. For example, if one buys flour, and bakes a cake that a classic depreciating asset. In two or three days, that cake will be worth less than the flour that went into it. However, if you sell it today to someone having a birthday party then you may make 3x on your investment. Buildings work the same way but with a longer timeline. That’s why developers build houses then sell them with the land, and don’t just sell land. It’s also why home owners invest in their own houses. If one builds a kitchen in their own house, they get to use it during part of the depreciating timeline. Let’s say kitchen costs 10k, they use it for 5 years and it’s depreciated to 5k worth. Now so long as it doesn’t cost 5k to raise it back up to 10k worth, then they have gained if they sell the house. Alternatively, they could rent out the house for 5 years at a higher rate because it has a kitchen. Like the cake, housing is an asset class where more strategies apply to it than “buy and hold”.
- midoridensha 4y ago
  What people think isn't the same as reality. Yes, I've noticed lots of deluded Americans think a new kitchen or bathroom is an "investment", but it's really not: they never get remotely as much money as they paid when they sell the home.
  - kbenson 4y ago
    That depends quite a bit on the area and on what is being remodeled and the current state of the market. Near me, $10k-$20k of landscaping can go a long way in affecting the listing and eventual sale price.
  - soupfordummies 4y ago
    The daily use of the upgraded kitchen and bathroom is value too, not just the resale.
    - midoridensha 4y ago
      Sure, but that's not how they rationalize it to themselves. They really believe they're going to get every dollar back in resale value, and then some. With ever-increasing house prices until recently, it seemed to be true to them.
soupfordummies 4y ago
Houses don't depreciate at nearly the same rate as cars though. Not uncommon at all to see a well-built house last over a century.

trashtester 4y ago

> That way, we could invest in productive assets instead of land. Housing is worse than "land". The building itself is inherently depreciating, yet many think that they "invest" when they get a new kitchen or bathroom.

true_religion 4y ago
You can invest in depreciating assets, if you sell them for higher than the cost of your investment. For example, if one buys flour, and bakes a cake that a classic depreciating asset. In two or three days, that cake will be worth less than the flour that went into it. However, if you sell it today to someone having a birthday party then you may make 3x on your investment. Buildings work the same way but with a longer timeline. That’s why developers build houses then sell them with the land, and don’t just sell land. It’s also why home owners invest in their own houses. If one builds a kitchen in their own house, they get to use it during part of the depreciating timeline. Let’s say kitchen costs 10k, they use it for 5 years and it’s depreciated to 5k worth. Now so long as it doesn’t cost 5k to raise it back up to 10k worth, then they have gained if they sell the house. Alternatively, they could rent out the house for 5 years at a higher rate because it has a kitchen. Like the cake, housing is an asset class where more strategies apply to it than “buy and hold”.
midoridensha 4y ago
What people think isn't the same as reality. Yes, I've noticed lots of deluded Americans think a new kitchen or bathroom is an "investment", but it's really not: they never get remotely as much money as they paid when they sell the home.
- kbenson 4y ago
  That depends quite a bit on the area and on what is being remodeled and the current state of the market. Near me, $10k-$20k of landscaping can go a long way in affecting the listing and eventual sale price.
- soupfordummies 4y ago
  The daily use of the upgraded kitchen and bathroom is value too, not just the resale.
  - midoridensha 4y ago
    Sure, but that's not how they rationalize it to themselves. They really believe they're going to get every dollar back in resale value, and then some. With ever-increasing house prices until recently, it seemed to be true to them.

soupfordummies 4y ago

Houses don't depreciate at nearly the same rate as cars though. Not uncommon at all to see a well-built house last over a century.