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.
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?
I could be wrong here but I believe that your parent comment is talking about how investments are guaranteed by the government in case of some kind of market shift.
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?
I could be wrong here but I believe that your parent comment is talking about how investments are guaranteed by the government in case of some kind of market shift.