Oh so you wouldn’t want to own a home if it didn’t pay well? Yeah. Same. And why should I get so shafted for wanting to live in a small apartment as opposed to ‘investing’ in a home?
A home is meant to be a depreciating asset like a car is. You need to maintain and repair it in order to sell it. You live in it, therefore it would be okay to pay a bit for it, buuuuut thanks to government subsidies and bankers and housing shortages, you are guaranteed to profit.
I don’t support downvoting you. I disagree with you, but you’ve made a concise and detailed argument for neoliberalism.
A home is meant to be a depreciating asset like a car is.
It is. Granted, it has become crazy expensive to buy a new home, so the used market has risen to compensate. Actually, we’ve seen the same thing happen in cars recently. New cars have become crazy expensive, so the used car market has gone up in price too.
But that’s outside of investing. Nothing says depreciating capital cannot be an investment. Consider a widget that cost $100 to buy and after one year is completely worn out and worth $0. But that widget during its useful life produced trinkets that you were able to sell for a profit of $120. There you go, a 20% return on investment, even though the capital is now worth nothing.
Cars and houses will always fundamentally be investments as long as they remain useful tools of production.
Houses are literally subsidized into being safe investments. The neoliberal government has decided that this is best for business.
Housing is only a safe investment if it keeps its occupants productive (e.g. allows one to take a job by living nearby). The job market is strong right now, but we’ll see how safe those investments are when that starts to turn…
But, if you truly believe what you say, why aren’t you buying one of those $100,000 homes in Newfoundland? Anyone can afford that. If the government is going to protect you, how can you lose?
A home is meant to be a depreciating asset like a car is.
A car and a home are two very different things, so they can’t be compared here.
Even the land your home is on increases in value over time, and I’ve yet to see a home in good condition that’s worth less than the amount it was purchased for. Unless you’re talking about those ghost cities in China.
What exact reason would you give to devalue a perfectly good home?
A car and a home are two very different things, so they can’t be compared here.
With respect to depreciation they are quite comparable. Deprecation is just the reflection of the remaining lifetime value of something.
Depreciation just tends to be more obvious in cars, because:
- Cars have pushed the technical advancement envelope a lot faster than houses. A 20 year old house still feels like something that was built recently. A 20 year old car feels like it was built by a much earlier civilization. This keeps greeter interest in having the absolute latest model in cars.
- Because of #1, people are more likely to recondition a home back to new condition. If a support structure in a house is seeing signs of rot, you are bound to fix it. If a car’s frame starts to rust through, you’re apt to throw the car away and get a new one.
I’ve yet to see a home in good condition that’s worth less than the amount it was purchased for.
A home in good condition has approximately the same remaining lifetime value as a new home, so that stands to reason. Not to mention that with ever more stringent building codes, new construction cost has gone up, up, up. The used market always follows the new market.
Even the land your home is on increases in value over time
Land does, but that’s independent of the home. I mean, they are usually sold together, but the buyer will determine their utility value independently. Two identical houses will not fetch the same price if one of them sits on more desirable land.
With respect to depreciation they are quite comparable. Deprecation is just the reflection of the remaining lifetime value of something.
And the remaining lifetime of a home kept in good condition could be many generations. Where with a car… you could pass that gas guzzler to your kid, but that’s about it.
In fact, homes can often be renovated to extend their original life far beyond even a few lifetimes. This ignores any upgrades that increase the value (i.e new pool, deck, etc.)
A home in good condition has approximately the same remaining lifetime value as a new home, so that stands to reason. Not to mention that with ever more stringent building codes, new construction cost has gone up, up, up. The used market always follows the new market.
Right, so it wouldn’t be depreciated like a car (which loses value to nearly nothing at the end of its usable life).
Land does, but that’s independent of the home. I mean, they are usually sold together, but the buyer will determine their utility value independently. Two identical houses will not fetch the same price if one of them sits on more desirable land.
That’s my point, though. When you invest in a home, you are also investing on the land it sits on. So you’re free to sell the home AND land, or just the land, if you like. It’s rare to see just a home (without the land) being sold.
In your example, the homes are still the same value, only the land changes the sale amount.
There’s no reason why either home would depreciate in value like a car, and the commenter has yet to expand on this idea.
Well, a home needs to be repaired and improved before sale. This is part of what the market demands. Gets more complicated with land, yeah… leads me back to zoning laws. If the land is so valuable in the suburb of a city, it should have multi-unit housing on it. Then the rich are forced to pay that raising cost and the poor get an increased supply of housing.
Well, a home needs to be repaired and improved before sale. This is part of what the market demands.
This is part of the investment a homeowner makes, and increasing the value of a home through repairs and renovation really shouldn’t be looked at as a bad thing.
If you are renting a place, you expect the same repairs and improvements to be made, which is why rent doesn’t simply drop because of “depreciation”.
If the land is so valuable in the suburb of a city, it should have multi-unit housing on it. Then the rich are forced to pay that raising cost and the poor get an increased supply of housing.
Well, some people do sell their land so that developers can have their way with it. I don’t think that’s a good thing overall, since there needs to be some balance.
But multi-unit housing on expensive land does not make it affordable. Having an income that’s above the median, in addition to renting, is what Stats Canada says is affordable housing to the majority of Canadians.
