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But what value does that asset (as an asset) for normal people (=with one home) actually have? For "investors".. sure.. buy 50 houses, treat them as investment

But what value does that asset (as an asset) for normal people (=with one home) actually have? For "investors".. sure.. buy 50 houses, treat them as investments, with limited new construction, the price goes up higher than inflation, you can rent them out, etc. For normal people? Price going up or down doesn't help them, because they still need a place to live. Can't rent it out, since they need a place to live. Can't really sell it, because then they have to pay monthly for the same thing, sometimes even more than before. Sure, some pensioners without kids might sell their house, ove into a rental for their last few years, and spend the difference on cocaine.. but that's not really a game changer for anyone. The only problem are the banks, where lower prices mean a shitstorm of revaluating, recalculating morgages, refinancing etc. But for someone with a paid off house, that they live in, if the "global" price of housing goes up or down 50%, it wouldn't matter that much.

matwood 3y ago
The biggest value for a single home owner is that their relative cost compared to rent goes down every year because of inflation. It's the regular person's largest hedge against inflation.
- ajsnigrutin 3y ago
  Well sure, because they own that house. If housing prices went down 50%, and they still owned that house and still didn't have to pay rent, they'd be in the same situation as before.
  - matwood 3y ago
    You're talking about a paid off situation which happens to few people until the end. What you mentioned prices what you're really talking about is inflation. Inflation is great for anyone with a large leveraged asset with a fixed payment rate. As long as inflation continues to go up, even slowly, the person with a 30 fixed mortgage wins every year. A concrete example is that my mortgage is 10 years old. When I bought it was a little tight each month and now I don't even think about it. The house next door rents for 2.5x what I pay. In a deflationary situation (possibly even depression) which you're describing, the fixed rate person loses. Rents will drop, salaries will go down, etc... Everyone loses, but those holding leveraged assets will lose the most.

matwood 3y ago

The biggest value for a single home owner is that their relative cost compared to rent goes down every year because of inflation. It's the regular person's largest hedge against inflation.

ajsnigrutin 3y ago
Well sure, because they own that house. If housing prices went down 50%, and they still owned that house and still didn't have to pay rent, they'd be in the same situation as before.
- matwood 3y ago
  You're talking about a paid off situation which happens to few people until the end. What you mentioned prices what you're really talking about is inflation. Inflation is great for anyone with a large leveraged asset with a fixed payment rate. As long as inflation continues to go up, even slowly, the person with a 30 fixed mortgage wins every year. A concrete example is that my mortgage is 10 years old. When I bought it was a little tight each month and now I don't even think about it. The house next door rents for 2.5x what I pay. In a deflationary situation (possibly even depression) which you're describing, the fixed rate person loses. Rents will drop, salaries will go down, etc... Everyone loses, but those holding leveraged assets will lose the most.