And the remaining lifetime of a home kept in good condition could be many generations.
Kept in good condition is the key. If you keep a car in good condition, it can last many generations too.
In fact, homes can often be renovated to extend their original life far beyond even a few lifetimes.
Same goes for cars, of course. There is a whole automotive industry around taking beat up old cars and restoring them to pristine condition. And, indeed, many of those cars can sell for way beyond their original price.
Right, so it wouldn’t be depreciated like a car
Right, it would deprecate because houses deteriorate. If you keep your house in good condition, it’s just you paying the deprecation cost up front when you restore it rather than taking the hit with the next guy in line. The math works out the same either way. The depreciation doesn’t go away.
It’s rare to see just a home (without the land) being sold.
Less common, but not unheard of. It happens often enough that there was once a Canadian TV series about moving houses.
In your example, the homes are still the same value, only the land changes the sale amount.
Exactly. Their values are evaluated independently of each other. The house can depreciate and the land can appreciate.
Kept in good condition is the key. If you keep a car in good condition, it can last many generations too.
I think that you’d need to be reasonable with what you’d expect to pay to keep a car running for generations.
I can’t see anyone wanting to spend tens of thousands of dollars keeping their Toyota Corolla running for generations.
Cars were never built to last 50+ years, no matter how good you maintain them (The average *maintained *car lasts around 12 years or around 320,000km). The ones that last 50+ years are in museums or auto shows. By contrast, 50-year-old homes are common and quite expected, and if maintained, feel like a new home!
Same goes for cars, of course. There is a whole automotive industry around taking beat up old cars and restoring them to pristine condition. And, indeed, many of those cars can sell for way beyond their original price.
Yes, as collector vehicles, not as daily drivers. I don’t think anyone envisions affordable housing as a home you’d get on the side to use only occasionally, which is what the cars you describe would be.
Right, it would deprecate because houses deteriorate. If you keep your house in good condition, it’s just you paying the deprecation cost when you restore it rather than the next guy in line. The math works out the same either way. The depreciation doesn’t go away.
I don’t disagree, but the person I was replying to makes it seem like a house’s value should always be in decline. That doesn’t make any sense, unless it’s been left to rot, which I don’t think people do when they are living in one.
Less common, but not unheard of. It happens often enough that there was once a Canadian TV series about moving houses.
Of course, I’ve seen a few homes being moved myself! Nobody does that for a house that lost all its value. 😉
I can’t see anyone wanting to spend tens of thousands of dollars keeping their Toyota Corolla running for generations.
They just might if a 2023 Toyota Corolla was effectively the same as a 1823 Toyota Corolla, differing little beyond coming in a more appealing colour of paint. Only needing to spend tens of thousands of dollars to have a new car would be a good deal.
That doesn’t happen because of the technical innovation happing in cars. Restoring your 1823 Corolla to new condition is nothing like a 2023 Corolla. It will still get you around, but with no cabin, air conditioning, power steering, radio, slower speeds, etc. who would want it? We already discussed this.
the person I was replying to makes it seem like a house’s value should always be in decline.
They are always in decline. You can spend more to buy the depreciation out when you restore it, or you can let it slip and spend that when you sell it, but the decline happens either way. There is no avoiding it.
Well, there is one way to avoid it: If the cost of new housing goes up sufficiently, it will drag the used market it with it. That could see an appreciation in value even with some wear and tear. In fact, we saw exactly that happen in the used car market recently when the “chip shortage” sent the new car market sky high. People were selling their used cars for more than what they were new.
That doesn’t happen because of the technical innovation happing in cars.
That doesn’t happen. Exactly. The comparison between cars and homes is silly and we can end it here.
They are always in decline. You can spend more to buy the depreciation out when you restore it, or you can let it slip and spend that when you sell it, but the decline happens either way. There is no avoiding it.
If there is a decline, yet people are able to profit from selling them home, then there isn’t a practical decline, is there?
Circling back to the original comment that I replied to, “A home is meant to be a depreciating asset like a car is.”, we’ve already established that a home without upkeep would be depreciated until it actually costs money to demolish the thing. We’ve also established that a home that’s been maintained and updated should not only hold its original value, but be worth more than it cost.
I still don’t understand what the argument is. Are people hoping that nobody can ever make money from the sale of a home or the land that their home sits on? Who would want that?
