Housing is a terrible investment, by the way. Real returns of around ~2% a year. And no, the recent run-up does not change that much at all. People only perceive it as a good investment as it’s forced savings.
But I don’t need that. I save without being compelled to do so.
We only bought a house when its expected investment “returns” could be in the sharp negative and we’d still financially be ok. That’s not the only time you should buy a house. That is up to you and depends on your risk tolerance and financial status. But you won’t even beat a money market fund with housing unless you get really, really lucky.
Housing as an investment is BS in all sorts of ways.
I read an investment book once that said the same. But it seems in recent years (the last 20 years ish), that in some markets, it has become an investment object. In Copenhagen flats and houses gain up to a years worth of wages in value per year. In many other parts of Denmark prices haven’t changed since 2008.
I blame new loan types and lax property taxes, but it is an international problem, not just a local one.
There’s a lot of money laundering occurring using housing all across the world. Where this is most concentrated, it does cause outsized gains. But for regular folks, that’s too risky and unpredictable to dip their toes into such a distorted market.
And most of the time, they can’t afford it.
If I needed to launder some money, I’d definitely choose housing as my method. It’s the easiest with the least scrutiny.
How much of the allure of buying houses would go away if they got rid of the mortgage interest deduction on federal taxes?
Of course, mortgages are like a rough form of rent control and other lenders see it as useful collateral — but that’s not the same as an investment.
HGTV is a very successful propaganda channel that nobody talks about as being propaganda. To me it’s even more successful than any news channel or social media outlet.
The mortgage interest tax deduction is a pretty large subsidy (that almost no one sees as a subsidy). I think housing prices in the US would probably fall about 15% if that were gone, depending on the area.
HGTV as a propaganda op is pretty apt. Have to keep people spending on big-ticket items. Keeps them in debt and lining the right pockets.