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It sucks how homeownership is supposed to serve this dual role of "having a place to live" and "having an infinitely appreciating asset" when the two are fundam

It sucks how homeownership is supposed to serve this dual role of "having a place to live" and "having an infinitely appreciating asset" when the two are fundamentally at odds with each other. I'm with you, though—as long as I can afford to live here, the value of my house doesn't matter so much because I like it and don't want to sell it. But part of me knows (and hates) that this house is also the biggest slice of my net worth, and its value heavily impacts any future financial leverage...

refurb 3y ago
having an infinitely appreciating asset It wasn't always viewed that way in the US until the past few decades. And in many places, it's not viewed that way at all, more of a "store of wealth", rather than a "good investment".
- bombcar 3y ago
  At best housing should roughly keep pace with inflation itself (and this is what it did for decades, perhaps even centuries depending on how you account for things) and therefor should kind of be “money losing” if you count depreciation and repair (and ignore the value of having a place to live). And until quite recently, in most of the country, this basically help, once you factored out size increase (modern housing stock is much larger on average than housing stock from the 50s or even 70s even as families are smaller) and also factor out mechanical improvements - modern houses are built better in many ways that do cost more. I wish more of the indicies that track this stuff did more to track the land and the improvements separately. Because most of the increase in valuation of land comes from the old farmhouse now being inside the city boundaries.
  - refurb 3y ago
    At best housing should roughly keep pace with inflation itself That's Robert Shiller's claim when you look at average home prices across the entire country over a long enough period. Contrary to popular belief, there has been no continuous uptrend in home prices in the US and the home prices show a strong tendency to return to their 1890 level in real terms. Moreover, he illustrates how the pattern of changes in home prices bears no relation to changes in construction costs, interest rates or population
    - rnk 3y ago
      But this doesn't seem to have been the case since I bought my first house 25 years ago. Prices have constantly been going up. I'm living in a west coast tech city, but it looks to me like all the tech cities have seen very steady home prices on a few years moving average, more than inflation. My house is 4x over those 25 years. A 3% annual increase would be about 2x over 20 years. Am I missing something in my inflation calculation, have we divided into areas with steady growth and increasing incomes vs say non tech cities without rising incomes and people moving there or is it something else? Because there are lots of cities, like stereo-typically mid-west cities that have struggled to maintain their population after major manufacturers leave.
      - bombcar 3y ago
        You're missing across the entire country and long enough period. Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological.
        refurb 3y ago
        Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological. The conclusion goes beyond that. The argument is that local areas may see price inflation, but over time they trend towards the mean (you can't have the average be inflation otherwise). So basically people may enjoy an increase worth of their property, but it's not a long term trend but rather something that happens in distinct periods, usually followed by a price drop or stagnation that pulls the average back towards the mean.
        bombcar 3y ago
        And that is a necessity or you quickly reach absolutely insane conclusions, such as the average house costing 500x the average salary, and 200x the average income to rent. It's simply impossible on a long term over a long area. And, as HN commentators, we have been accustomed to appreciation in "our areas" for nearly 40 years now - and that has covered many "mistakes" that may not be covered in the future.

refurb 3y ago

having an infinitely appreciating asset It wasn't always viewed that way in the US until the past few decades. And in many places, it's not viewed that way at all, more of a "store of wealth", rather than a "good investment".

bombcar 3y ago
At best housing should roughly keep pace with inflation itself (and this is what it did for decades, perhaps even centuries depending on how you account for things) and therefor should kind of be “money losing” if you count depreciation and repair (and ignore the value of having a place to live). And until quite recently, in most of the country, this basically help, once you factored out size increase (modern housing stock is much larger on average than housing stock from the 50s or even 70s even as families are smaller) and also factor out mechanical improvements - modern houses are built better in many ways that do cost more. I wish more of the indicies that track this stuff did more to track the land and the improvements separately. Because most of the increase in valuation of land comes from the old farmhouse now being inside the city boundaries.
- refurb 3y ago
  At best housing should roughly keep pace with inflation itself That's Robert Shiller's claim when you look at average home prices across the entire country over a long enough period. Contrary to popular belief, there has been no continuous uptrend in home prices in the US and the home prices show a strong tendency to return to their 1890 level in real terms. Moreover, he illustrates how the pattern of changes in home prices bears no relation to changes in construction costs, interest rates or population
  - rnk 3y ago
    But this doesn't seem to have been the case since I bought my first house 25 years ago. Prices have constantly been going up. I'm living in a west coast tech city, but it looks to me like all the tech cities have seen very steady home prices on a few years moving average, more than inflation. My house is 4x over those 25 years. A 3% annual increase would be about 2x over 20 years. Am I missing something in my inflation calculation, have we divided into areas with steady growth and increasing incomes vs say non tech cities without rising incomes and people moving there or is it something else? Because there are lots of cities, like stereo-typically mid-west cities that have struggled to maintain their population after major manufacturers leave.
    - bombcar 3y ago
      You're missing across the entire country and long enough period. Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological.
      - refurb 3y ago
        Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological. The conclusion goes beyond that. The argument is that local areas may see price inflation, but over time they trend towards the mean (you can't have the average be inflation otherwise). So basically people may enjoy an increase worth of their property, but it's not a long term trend but rather something that happens in distinct periods, usually followed by a price drop or stagnation that pulls the average back towards the mean.
        bombcar 3y ago
        And that is a necessity or you quickly reach absolutely insane conclusions, such as the average house costing 500x the average salary, and 200x the average income to rent. It's simply impossible on a long term over a long area. And, as HN commentators, we have been accustomed to appreciation in "our areas" for nearly 40 years now - and that has covered many "mistakes" that may not be covered in the future.