[hnnameblah365]

I would pin the failure on how we view home ownership as an investment vehicle. There's little inherently appreciable to a building. In fact they depreciate over time and require constant investment to maintain.

The location however can appreciate, which we all agree on. But we never say out loud the underlying mechanism. Locations appreciate in value specifically because more humans want to own it.

Viewing homes as investments therefore, requires you to steadily make more and more people want your home who are unable to have it. This explains why NIMBYism is so effective at raising house value.

[nemo44x]

Structures don’t necessarily depreciate in value over time if maintained. The costs of materials and labor increase allowing an existing structure to maintain value and appreciate. Have you seen how much a 2x4 costs today? $8! When my home was built that piece of wood cost 5 cents.

So the value of the structure is what it would cost in terms of parts and labor today minus existing wear-and-tear and needed repairs. Of course maintaining the structure probably eats up any potential profit over time on the structure itself while the land appreciates indefinitely.

However in many places the land is worth far more than the structure.

[hnnameblah365]

The other way I thought of that the building itself appreciates is if the craftsmanship style becomes antique or vintage down the line. Or the architect becomes notable, etc.

[ethagknight]

This is not correct, both land and structure have differing but related values. With persistently increasing construction complexity and building code, replacement cost generously outpaces existing building value. At least from a USA perspective, many neighborhoods are stuck with older, dated housing stock that would be aesthetically better off scraped and rebuilt in modern form, but the existing home is too valuable and ground-up new construction too expensive relative to market.

In typical US middle-income neighborhood, a scraped lot isn't worth much because the cost to build a suitable replacement home is too high, above market rates per sf of living space. Its a risky investment, but someone may agree that the value is worth it and buy it down the road, or maybe not. The same home site with a decent (but boring) home in good marketable condition will be priced relative to median incomes and market values of surrounding neighbors. The home structure is the valuable, appreciated component in this scenario.

Home ownership certainly is an investment vehicle- tradable and you can gain or lose lots of money on it! its also the largest single investment for most/many people. Many investments have operating and maintenance costs, nothing wrong with having to fight some depreciating elements in an investment.

Land value is important. Structure value is important. Pin the failure on viewing homeownership as a "sure bet, can't lose" investment causing too many people to aim to high above market.

[bradlys]

> With persistently increasing construction complexity and building code, replacement cost generously outpaces existing building value. At least from a USA perspective, many neighborhoods are stuck with older, dated housing stock that would be aesthetically better off scraped and rebuilt in modern form, but the existing home is too valuable and ground-up new construction too expensive relative to market.

Is this not NIMBY-ism? You either need to build a new house that is very expensive OR you can just buy my little shit-shack that is grandfathered in. It's a bargain in comparison - believe me! Either way, pay me lots of money or increase the value of my property indirectly.

[ethagknight]

Not NIMBY, that’s a separate, complicated issue. I’m just referring to the intrinsic value of an existing structure, replacing like for newer like, in a rational “middle America” market (not california).