[jpdus]

What you call "corrosive" (appreciation of non-value-creating assets) is 1:1 applicable to Real Estate.

Compared to the appreciation of worldwide real estate, the market value of crypto is only a drop in the ocean. And countless people got unbelievable rich due to rising prices and "crowding-out" in cities without creating any value for society at all (in the opposite, making life harder for everybody struggling to keep up with their rent).

And nobody so far managed to explain convincingly, in which ways investments in (existing, residential, not for self-use) real estate creates any value. People don't by these assets b/c they provide better service or can run their properties more efficiently than someone else. They buy these assets b/c its risk-free return on the backs of tenants who need a place to live. In this aspect, Real Estate investors are arguably way worse than Crypte gamblers. But I agree that the rent-seeking behavior we see in more and more parts of our economy and our society is indeed corrosive in the longterm....

[alert0]

Comparing cryptocurrency to real estate is laughable. With real estate you have either a place to live, reducing a real world expense (rent), or an income producing property. No matter how much you dress up cryptocurrencies as stocks, by using terms like market cap, you are not buying a share of an income producing asset. You're speculating on a digital collectible. You can speculate on real estate and stocks, but you can also invest in them.

[andrepd]

> If you buy an income producing property that's good because it is an income producing property.

Not sure I understand your reasoning there.

> You're speculating on a digital collectible.

And if you buy properties not for self-use you're speculating on a physical collectible. So?

[alert0]

First quote isn't exact, so I'm not sure what you're addressing.

If you buy properties not for self use, you can hold them indefinitely and have an income stream. If you buy a share of a company and hold it indefinitely you can have an income stream. There is no equivalent in cryptocurrencies. You buy it and hope you can sell at a later date for a higher price.

Investing versus speculation.

[galaxyLogic]

I agree. I think it's worth pointing out that investing in crypto-currencies is really no different from investing in any currency say Euro. And when you have money in a US bank-account you are (typically) "invested" in US Dollars. But see below, that really is not investment, but speculation.

Investing in a currency/cash is speculation in the sense that currency itself does not produce anything but its value can go up and down. Investing in a currency is like investing in roulette in casino, you may win and you may lose.

So, keeping your money in bank for ~0% interest really is gambling/speculation too.

But, from the point of view of the individual investor it does not matter if you are "investing" or "speculating". In both cases you may win and you may lose.

[muskox2]

Many people buy real estate and let it sit empty, to sell at a later date when the price increases. This is actually a destruction of value as the house is no longer being utilized for it's intended purpose.

[solosoyokaze]

They compared it to the appreciation of real estate, which is wildly divorced from real value. Real-estate prices in say, the Bay Area are driven by legislation and speculation. Not actual value. The move to remote works accelerates the discrepancy.

[clpm4j]

Isn't the value of a house what someone is willing to pay for it? There are still a lot of people buying homes in the Bay Area to live in. There are just a lot of rich people in the area, so they're willing to pay the price that the market is setting.

[solosoyokaze]

> Isn't the value of a house what someone is willing to pay for it?

This is why it's being compared to crypto currency. The parent comment I was responding to said it's not a fair comparison but "it's worth what someone is willing to pay for it" describes both.

[6gvONxR4sf7o]

Real estate prices in the Bay Area are also driven by the boatloads of money coming into the area and then not going back out. Our local money supply has gone way up. After all, when local worker salaries go so far up, why wouldn’t the price of goods they’re bidding for go up too?

[carom]

It isn't. If you look at residential income properties, they trade around the rents that they command, sometimes with some development potential sprinkled on top.

[imtringued]

California has statewide politics that prevent the housing problem from being solved, so people move to the next state, which they don't like because California has nice weather.

[betaby]

California is not much different in that regard from Ontario or Quebec, or most of the western world really.

[CyberDildonics]

> And nobody so far managed to explain convincingly, in which ways investments in (existing, residential, not for self-use) real estate creates any value.

Shelter is literally third on the list of human needs after water and food. Make something desirable and people will leave their previous (possibly decent) place behind to move in. I'm not sure how anyone can say real estate doesn't create value just because they are frustrated that some people make money off of real estate.

[unholiness]

In densely populated areas, the value of real estate has very little to do with what's built on the property, and everything to do with the land it is build on.

GPs point is that owning land is not creating value. It is, however, very profitable.

[imtringued]

You either have a sufficiently large land value tax or let the government rent out land instead of selling it.

In both cases the land would become a liability that you constantly have to take care of instead of being an "investment".

Productive work like building on top of land should be rewarded, waiting for a train station to be built in your neighborhood is not productive work that should be rewarded.

Pretty much every economist thinks that the work <-> reward relationship should be as tight as possible. However, most of them don't think of anything other than cutting taxes and strangely enough they insist on being able to take advantage of negative externalities (CO2 or illegal waste disposal in general).

[andrepd]

Hi fellow Georgist! What a great summary.

And yes it does not stop at LVT which encourages useful development and discourages speculation and keeping land/homes empty. It extends to anywhere where society/the public/the commons is not being adequately compensated by private interests for the benefits they take. Goes from natural resources to pollution and paying for the waste processing of the products you produce (no more saving 5c by using a plastic bottle which costs the public 10c to dispose of).

[6gvONxR4sf7o]

> However, most of them don't think...

That’s not the impression I get. They seem to have all kinds of broad beliefs.

[DylanDmitri]

People who build housing create value. People who manage properties create value. People who speculate on properties do not create value.

[ryan93]

Why are people selling real estate assets to speculators for less than they are worth?

[imtringued]

Because the real estate market is very illiquid. Each property is unique. It's not easy to figure out the right price. Trading isn't even bad, it's contributing to price discovery in the market and makes sure that the average sale price is close to the actual market price.

The problem isn't that speculators are evil people but rather that the "arbitrage" they are doing is fueled by regressive housing policies. Increasing the efficiency in the housing market exposes the fundamental housing problem. After all, it can't just be that speculators are snapping up properties, there must be buyers that are willing to buy properties from the speculators, otherwise the speculators lose money. Those buyers don't even need to think that the house is overpriced, the house could genuinely be a good deal for them.

[6gvONxR4sf7o]

Who says they are? Speculators are betting on what costs will be, but the people selling to them are (tautologically) doing it based on what it costs now. Some speculators win, some speculators lose, but I would say they’re necessarily performing arbitrage.

[andrepd]

So people use unfair property rights in order to extract a rent from an essential human need, without doing labour or providing any service in return. Is that your argument?

> If you complain you're just jealous

Everytime.

[CyberDildonics]

> So people use unfair property rights in order to extract a rent from an essential human need, without doing labour or providing any service in return. Is that your argument?

That wasn't anyone's argument, I think you hallucinated all of that. The person I replied to said real estate has no value.

> > If you complain you're just jealous > Everytime.

I did not say this, you hallucinated that too.

[aabhay]

In the grand scheme of history, land ownership by the larger public is essentially nonexistent. Land almost always was ‘owned’ by a government-supported aristocracy. For the vast majority of history, land ownership also meant sovereignty. As in, it’s yours if you can fight for it.

So yes, I agree that real estate ownership is not ‘value creation’ in the modern world. It’s speculation of a finite resource, but unlike Bitcoin that resource is essential to livelihood

[Invictus0]

> They buy these assets b/c its risk-free return on the backs of tenants who need a place to live.

Where were you in 2008?