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NotObviouslyARobot t1_j20v42w wrote

Reply to comment by strvgglecity in What would food look like if we could scale up lab grown meat? by sandcrawler56

"A house is an investment the same way a car is. Meaning, it's not."

Wrong.

A house has earning power in the same way any suitable business location has earning power, regardless of whether or not you rent it out. The earning power incurred by owning anything is equivalent to the opportunity-cost of not owning something.

If my house costs me $300/mo. less than renting the equivalent, my home is creating real shareholder value for Myself, LLC, regardless of whether or not I'm renting it out.

There are two ways to make money in business: realize cost savings or improve sales. Owning a home is like investing in LED lighting to realize a smaller electric bill.

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strvgglecity t1_j21gigv wrote

Sure, ok, except... It's not, because homes depreciate just like cars. They require consistent maintenance. They also incur annual taxes that are never recouped. You also can't just sell your home, unless you simultaneously secure a new place to live.

The only reason prices go up is scarcity, and that relies on external factors far beyond your control. If a new development pops up next to yours in 10 years, your home is likely to be less desirable, and therefore command a lower selling value than the newer homes, because it is old and has depreciated. Flipping homes can be profitable if you can manage to affordably rehab a beater.

https://www.forbes.com/advisor/mortgages/real-estate/is-buying-a-home-worth-it/

If you'll notice, the people saying it's a good investment are literally the people selling mortgages.

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NotObviouslyARobot t1_j23it4r wrote

"They require consistent maintenance. They also incur annual taxes that are never recouped. You also can't just sell your home, unless you simultaneously secure a new place to live."

All of the above also applies to owning a business asset, especially property. I'm about to go upgrade all the lights in a business property over the weekend. I've done lots of maintenance on it. It makes us money, but we can't just sell it unless we simultaneously secure a new place to do business. It also depreciates.

Real-estate value is determined by the amount of the purchase loan approved for the property, or the amount of money flowing around a market. This is why we have the USDA rural development program.

That new 300K development next to your 120K development isn't going to negatively alter your property value. In fact, it usually has a positive effect by increasing the number of dollars in the local real estate market--and by helping drive businesses to the area. This is one reason why the practice of Redlining was so harmful to older African-American neighborhoods.

There's an observed social behavior in humans called gravitation. Gravitation says that our geographic preferences follow a distance decay function. IE, the closer things are, the more likely they are to interact--and larger groups of a particular thing, have more drawing power than smaller groups of the same thing.

What drives down real-estate values is large centers of gravitation disappearing or being built far enough away from you that they draw people away in a cascading effect.

Homeownership is an investment. Like any investment, it can be good, bad, succeed wildly, or go tits up.

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