I agree with most, though I think it depends on location and local conditions.
I think at best, a house is a store of value as even when it goes up, it will be similar to the inflation rate after maintenance and interest on loans etc.
However, there are other factors to consider. For example, my family has moved to a house and monthly costs will be about 10% less than what we were paying in an apartment we owned, but we sold at a high point and got a good deal on the house too. Renting would be cheaper monthly, but only very slightly, with only maintenance and interest the difference.
This means that there is also lifestyle things to consider, including the space factor for my daughter, who has changed markedly in the time we have moved. Part of this is natural, part is because she has the space to play outside by herself and take some responsibilities we didn't have earlier. While not directly economic, I wonder what effect this has in her opportunities later too - will taking different responsibility early change the way she approaches the world in comparison to those around her? Hard to say, but all of this should be factored into it in some way, as the environment we create becomes influential over our thoughts.
On that, what if space affected the way we think about availability. What if living in cramped quarters created a more "scarcity mindset" than having space? Not saying it does, just came to mind. :)
You bring up a good point and I agree buying a home comes with other considerations perhaps closer to your job, closer to better schools, more space, safer area all that can benefit your in terms of travel to work saving time, more leisure time, could be money saving and qualify of life
However to me these are all emotive rationale and im considering things purely on numbers basis! I mean sure if you move and you double your income you offset a lot of the costs but then we get into the weeds of every situation where it can be the exception
Is it a store of value? Yes I would agree depending on the area and home condition as you say but is it the best or most reliable probably not!
I am also quite apprehensive on property having lived in a country where my parents and grandparents had their homes taken from them by the government so yeah something so rigid and tangible carries risks we often don’t think about due to being in a politically “safe zone”
Running the numbers as I like to do, just in general it doesn’t seem like a good investment in the current macro conditions
Yes, I know this. But I also think that due to the way we work, we often make immediate economic decisions that are potentially damaging to our long-term economic conditions.
Depending on where it is. in a city (close to) is pretty robust - in a small town with one industry that supports it - there is no floor on the drop when the company inevitably fails or moves.
This is definitely a location, location, location thing ... But, it can essentially and probably will happen everywhere in time, we just have to wait long enough. I can't see it happening in Finland in my lifetime, but who knows these days with the retarded social movements people ascribe to.
We bought just before Corona arrived - we were unlucky in some respects, lucky in others - since we were able to sell our apartment at a good price, but we probably could have got the house a little cheaper. All in all, we are up in the changeover there though. Then, it is going to also factor in culture, where people are going to change their habits over time. There are tens of thousands of apartments that are near identical being built around the cities - not many standalone homes. But, the ones that are standing can end up getting a lot of demand when the swing happens in the other direction - which in some places it is because of Corona and people needing office space, something that most apartments (in Finland) just don't have - let alone enough space for a couple to work comfortably from home at the same time. There will likely be more remote work in the new normal, and some will change their home spaces to suit.
I agree with you on we live in a world where immediate economic gains drive a lot of malinvestment (of resources and time in the future), I talk about it often. I have seen many people think their wealth is in their homes and end up with nothing, I encourage people to deleverage and not have 60-90% of their wealth in a home.
Indeed all you mention their location, access to amenities, political stability, capital inflows in the region are all speculative value adds that you need to price into the purchase.
It's like buying equity in a company, how much are you willing to pay to get access to their free cash flows that may be used to pay you divident or increase the price of your investment in the future. We don't know if the company will continue to do well, but we hedge that future risk price it in and make the purchase.
I think many homeowners don't do this, they price the home based on what the bank is willing to give them and because the majority of homeowners don't take the time to run the numbers on a value basis, they just bid up prices like a passive index fund. Whatever money the bank allows gets ploughed into the property price.
I totally get the motivation, but there you already mention the cost-benefit, you're getting more space to both work from home and you made an investment decision that has the potential to offset the losses. I eventually have to do this I know, I am just building up capital reserves.
I am also not tied to purchasing in any one country least of not my own, as I also work remotely I have the luxury of spending less as the location doesn't matter as much, more the value/size amenities I can get for my money
Oh, btw, I have found this post really interesting to read as it has brought up lots of points for me to mull over, Thanks!