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It's zero sum because increases in home value don't do anything for the home owner. They have to sell to liquidate that value, but then they need to buy anothe
by mywittyname 2y ago
It's zero sum because increases in home value don't do anything for the home owner. They have to sell to liquidate that value, but then they need to buy another place to live. But since housing inflation is roughly even across regions, all of the proceeds from the sale of their current home have to be rolled back into their new one.
If a family moves into a $100k house, lives there for five years and sells it for $150k, they might have made $50k. But when they move into a $300k house that was worth $200k five years ago, their situation hasn't improved.
The only people who benefit are the odd ducks who buy in coastal California, then sell to move to Iowa.
- skybrian 2y agoI think this is assuming the conclusion. If you assume houses didn't change at all then sure, the "value" is the same as before even though the price went up, and home owners didn't see any benefit. Sometimes that's true for a particular house, but why assume that overall, no houses changed? Contractors get paid to do things. People do work on their houses. Also, the value of a thing is often due to context rather than the thing itself. The neighborhood could really have gotten better over time, even if the house itself didn't change. That counts as a benefit. Maybe not one you wanted, though.
- solatic 2y agoWhat you're describing is inflation, not a zero-sum game. The price of something is not the same as its value. If you have a fixed amount of somethings but their price is increasing, that's inflation in a zero-sum game. But there isn't fundamentally a fixed amount of housing; it's just that in many markets, the amount of housing isn't growing fast enough to seem like it isn't a fixed amount. But changes to laws and policies could start to increase the amount of housing.