[pjc50]

The tech company wins or loses based on innovation (unless it goes the monopoly route, in which case it's back to rent-seeking).

Real estate is scarce, inherently exclusive by location, and limited in supply by planning law. The amount of money returned by real estate is totally out of proportion to the work involved in its maintenance.

[DominikR]

> The amount of money returned by real estate is totally out of proportion to the work involved in its maintenance.

And what is the work involved in building a housing unit? If you build one in most of the EU capitals today you can expect to get your investment back after 30-40 years if you rent it out. (that's why most just sell the housing unit)

Would you make an investment in a company expecting to get your investment back after 30 years? I certainly wouldn't because I want to make profit while I'm still alive.

If housing units would grow like trees without human interaction then you'd be right, but each one of them had to be built in the first place.

[pjc50]

The returns aren't in the rent, they're in the capital gains. More gains than the stockmarket. This is why people are buying the units, especially from overseas. Sometimes they're even left unlet.

[skewart]

FYI, the vast majority of rental real estate is owned by investment firms who buy and sell entire buildings, not people buying units.

In general capital gains in an otherwise depreciating asset are tied to outsized increases in the revenue stream that asset produces. To put it another way, the increase in value is fundamentally driven by an increase in the number of people who want to use the building or the neighborhood - it's driven by a real utilitarian value that the asset does provide, or has the potential to provide for people.

If you think that real estate always goes up in value (above inflation) I would wager you've spent most of your life in the big cities where an increasing number of people want to live. I also have some lovely properties in Buffalo and Detroit that you might be interested in.

Of course, sometimes, in a frothy market, both professional firms and random individuals speculate on real estate, looking for capital gains disconnected from any underlying fundamental increase in utilitarian value. There are plenty of half-finished subdivisions in rural Florida that show how real this phenomenon is. However, it's an aberration, and it's fundamentally unstable so it doesn't tend to last for long.

Drawing conclusions about real estate markets in general from speculative bubble conditions is similar to drawing conclusions about technology companies from day trading on the Nasdaq in 1999.

[DominikR]

> More gains than the stockmarket

Sorry, but this can't possibly be true. Since the 2008 crash the Dow Jones for example tripled in value while the San Francisco housing market gained 40%.

It is very rare that the real estate market outperforms the stock market.

[roel_v]

So if I have, say, a machine that makes t-shirt more cost-effectively than my competitors, your claim is that I'm 'rent-seeking'? Do you think that because it's not innovative, or because I'm the only one with such a machine?

(This is a trick question. Before you answer, please make sure you actually know what 'rent-seeking' means, because it's obvious that most other commenters don't.)

[pjc50]

"Rent-seeking involves seeking to increase one's share of existing wealth without creating new wealth" - WP.

The more efficient T-shirt machine produces more with less, therefore the overall resources available go up. Not rent-seeking.

Having a patent on the machine, and/or attempting to sabotage the creation of similar machines? Rent-seeking.