[cjpearson]

There's a common view that home-ownership is important because a home is the most expensive asset most people will ever own and its increasing value is key to their comfortable retirement. But this view of a home as an appreciating asset is incompatible with increasing housing affordability.

There are definitely downsides to renting such as landlord issues or missing out on mortgage subsidies, but maybe a higher proportion of renters could lead to improvements in affordability. And if the well-off are renting as well, there's also more hope for better legal protections for renters.

[RugnirViking]

People don't say home ownership is important because it's an asset for retirement; if you sold it, you wouldn't have a home in retirement!

They say that because owning a home allows you to reduce your bills, but also more crucially and viscerally because owning a home allows you to be free and have a place that is truly yours to do with what you will. You can paint the walls, have a pet, host a party, knock down a wall and build an extension, do whatever you like to make your mark on it and the world. It's yours and if you will it, it always will be. It's a level of peace and security that's almost incomparible. There's a reason in most of history there was a distinction drawn between bonded peasants and freeholders.

[UtopiaPunk]

I think you listed great positives for ownership. I would agree with those. But the parent is correct that, at least in the USA, owning a home is considered a financial investment that should appreciate in value. I think treating a house as a financial investment leads to all kinds of bad outcomes, and here we are.

"People don't say home ownership is important because it's an asset for retirement; if you sold it, you wouldn't have a home in retirement!"

It's very common in the USA. A married couple has some kids and buys a house big enough to accommodate them comfortably. 20ish years later, the kids have moved out and the parents don't need such a big house. They also are about to or have recently retired, and they would like to stretch their retirement money. Sell the big house, make a lot of money, and then buy a smaller, cheaper house. In the USA this pattern is pretty common.

[angmarsbane]

This pattern has been disrupted because of the decades of under-building. The neighborhood I grew up in around an elementary school is populated by empty nesters and has been for over a decade. There is nowhere for the empty nesters to downsize into that isn't 3-5x what their mortgage is on their family sized home (in CA we also have the complicated of Prop 13 on property taxes) so they aren't moving. My highschool recently shut down because there weren't enough families in the neighborhood around it anymore.

[UtopiaPunk]

I think things are breaking, for sure, but how badly and in what ways is very local. To your point (and my point, a bit), with current market conditions, many homeowners are staying in their homes rather than moving. We had a pretty long period of very mortgage rates, and now rates are higher. Home prices have not decreased, either. So someone with a home that is a little too big has something valuable that they want to hang to, and buying a smaller house is, at least for now, not necessarily a good financial decision. But if housing were not an investment, a elderly retired couple could just move to a smaller house and not think too much about it. But it is an investment, so they stay in their unnecessarily large house hoping the market changes in their favor.

[lazide]

Also, it’s a risk hedge. In many very populous areas property tax increases are capped.

This allows someone to quite concretely limit their housing costs in retirement (a large portion of anyone’s expenses!) in a way that is impossible in almost any other way. The only other similar types of deals are specific types of rent control in very limited metro areas.

That is huge.

[bluGill]

Even if property tax increases are not capped, they are generally a fraction of what the house payment would be. (though after 30+ years of inflation the tax is what the original house payment was)

Generally if you rent your share of property tax in the rent payment is higher than an equivalent house share would be Tenters don't see how property tax affects their rent and so they generally don't oppose property tax increases, if they even bother to vote which they are less likely to. To be fair, how tax affects tax is complex - rent is supply and demand first, things like taxes put a floor on prices and so affect supply but this means it is indirect and so hard to see even though it will catch up eventually.

[lazide]

Almost no one is still making house payments in retirement. Those that are, almost certainly got that mortgage decades ago and it’s now a tiny fraction of current rental prices.

[UncleMeat]

"Buy a home, pay it off, then downsize to generate funds for retirement" is a pretty widespread approach.

[throw0101a]

> "Buy a home, pay it off, then downsize to generate funds for retirement" is a pretty widespread approach.

[citation needed]

> The majority of retirees don't relocate. A 2015 analysis (the most cited historical data) from the U.S. Census Bureau’s American Community Survey showed that only about 5% of Americans age 55 and older move annually (local or long-distance).

[…]

> A more recent study, from Hire a Helper, showed that in 2024, only 22.7% of all retirees (both new and existing) moved, compared with 25.3% in the year before.

* https://www.kiplinger.com/retirement/retirement-planning/myt...

Lots of folks say they want/plan to downsize though:

* https://www.usatoday.com/story/money/2019/05/21/home-buying-...

And of the half that say they are moving, half (25% of total) "want their next home to be the same size as their current one, and 22% want it to be larger".

[cjpearson]

Those are perfectly good reasons and in the hypothetical world of housing affordability such utility should compensate for the depreciation. Similarly many people find value in owning a car despite the nearly guaranteed decline in value. Ideally neither would be viewed as a wealth-building tool.

[CPLX]

It’s all this but don’t underestimate predictability. If you own a home with a fixed rate mortgage you know what your payment is and it doesn’t change. You know where your kids are going to grow up.

Sure you might need a new roof and insurance and taxes fluctuate but that’s a BIG BIG deal as anyone who’s rented and been at the mercy of markets can tell you.

This is even more true now as the rental market (like so many markets) is coming to be dominated by corporate landlord La using revenue extracting software.

[sethammons]

I recall talking to a real estate guy as a recent high school graduate 25 years ago. He claimed real estate rates will stay above 7-10%. I countered that long term, real estate needs to remain tied to inflation or else all buyers will be priced out.

He is doing very well.

[bluGill]

Interest rates, or appreciation rates? They are different and I'm not sure which either of you are talking about.

[sethammons]

Talking about investment returns.

[Eddy_Viscosity2]

Looks like you can both be right.

[lazide]

Classic ‘the market can be irrational longer than you can be solvent’ situation if I ever saw one.

[npc_anon]

In a situation of supply scarcity all the market needs to do to function is to sell this limited supply. And this does not require the median citizen to be able to afford this supply. Thus the market isn't even irrational.

[Eddy_Viscosity2]

All those tax cuts to the super rich have to go somewhere. Buying up property is one of them.

[Ekaros]

More so you need to generate the money that goes into stocks and other assets from somewhere. This seem to be done either by government debt or by debt against increasing home values...

[_Wintermute]

I don't see how I could ever afford to retire whilst still having to pay rent in the UK.

[bluGill]

> But this view of a home as an appreciating asset is incompatible with increasing housing affordability.

It isn't, but it seems that way. If you pay your house off before/when you retire that means you live rent free (you still have property taxes and maintenance, but they are far cheaper than rent). Social security is the same either way. Your 401k and IRAs have maximum contributions and so again not having to pay rent means your retirement income is effectively higher.

A house as an appreciating asset is only good for retirement if/when you sell - but then you either need to invest that money and pay it out in rent which has also increased, or you need to buy a new house. There is also risk - if you go to a nursing home the house is treated special, but if you sell it the additional money is used to pay the nursing home before government kicks in. Which is to say that for retirement planning house values are meaningless.

An appreciating house is useful if like many people you "cash out refinance" I've seen many people refinance their house every few years to the current house value. They take very nice vacations paid for by the house increase in value. This is all good until they retire and now owe what the house is worth and so they are paying rent with their limited income.

[throw0101a]

> But this view of a home as an appreciating asset is incompatible with increasing housing affordability.

Historically it's appreciated in the 2-5% range, which is roughly the same as inflation.

* https://www.longtermtrends.net/home-price-vs-inflation/

[carlosjobim]

During most of history, slaves were allowed to purchase their freedom with money they had made on the side. Your argument is the equivalent to saying that maybe it is not worth it, because the price of freedom is too high to be worth it. Sure, that's a way to see it. But another way to see it is that something else is wrong in the situation.

[ptdorf]

Don't own anything and be happy, kids!

Seriously, the fact this comment is, so far, at the top is mind boggling.

[abenga]

"Everyone should be able to afford to buy or build a home" and "everyone's home should appreciate in value as an investment forever" are direct opposites.

[tossandthrow]

I think people tend that think that home ownership is important as people tend to care more about thing they own.

But then again. Now where home ownership is so financialized, people don't dare to do zit out of the ordinary, which again leads to boring cities.

[whywhywhywhy]

If even a smaller group controlled the supply of something why would that supply decrease in value.

Currently rental prices have to compete with how much effort a boomer wants to put into profiting from their second or third homes, a fair amount but most realize a stress free tenant is better than maximizing profit.

If you remove these independent landlords then it falls to a tiny group of giant orgs that then control the market and can charge whatever price they want.

[lazide]

That’s why the dynamic is unlikely to change until a large portion of boomers have died out.

[lotsofpulp]

Why would it change after the boomers die out? The population age histogram is going to get even more top heavy:

https://www.populationpyramid.net/united-states-of-america/2...

[lazide]

Because most of the younger generations didn’t have a chance to buy in at the lower prices, and hence haven’t owned much as a percentage at the same ages. Boomers own most of the real estate right now, and have for a very long time.

It’ll spread around more when they die.

At least as this quotes “Millennials own less than two-thirds of the real estate Baby Boomers did at the same age”.

[https://www.visualcapitalist.com/sp/ter01-real-estate-owners...]