Many, many people think of a house as an investment. I think that’s a mistake. I think it’s only an investment under very specific conditions that can change at any time. Those conditions include a population that’s increasing and getting wealthier. If you don’t believe me, sit down with pencil and paper and work out the costs (purchase price plus mortgage interest, taxes, and maintenance costs) and market value of your house if you assume that the pool of potential purchasers is smaller and have a lot less money than the pool of purchasers was when you bought your house. Market value is determined by willingness to pay not intrinsic value.
Houses could be status symbols.
They could be tools, shoehorns that get you into the school districts where you want your kids to attend school.
They could be consumables, like autos or pairs of shoes.
What is a house?
The definition and function of a house holds different meanings and applications for different people. Consequently, it can be any one of the above suggestions, plus many more.
For me, a house is a “home” – a sanctuary, a given space where self expression prevails, radiating personal hues of who my husband and myself are. As we are hands-on people, we have personally designed, built and continue to maintain our house. So, our involvement in creating a home goes further than being a financial “investment,” or some temporary “pad” that is flipped for profit. Rather, our home has become an investment of time, energy, literally a vault, with an address, where moments and events have become treasured memories.
What is a house? Temporary. I’m getting ready for a local move, giving up my view, my much-loved view, so that Julia can be closer to school and these people she calls ‘friends,’ a concept, unknown to the three misanthropes in the family. We’re giving up the view but gaining toilets that flush and kitchen cabinets that don’t just decide to fall off at random times.
For me ‘home’ is wherever I happen to be. So far that’s over 50 domiciles. What’s permanent is what’s in my head, not what’s outside. Some places I loved living in – Fouras, France; Washington, DC; Portland, ME; Evanston, IL; Chapel Hill, NC; Pelago, Italy; Tiburon, CA. All lovely places in one way or another, but none of them are a place I want to buy a house and ‘settle down.’ So in the nature of things any house purchase has to make short-term economic sense, and it just tends not to. I’ve owned three homes, none of which was wildly profitable.
If I buy again it will almost certainly be overseas – not because I assume that will be permanent, but because the quality gap between rental and purchase widens in many places. The Euro is basically at par with the dollar (!), the GPB is at a buck twenty (!!) and there’s talk of the dollar rising another 20% (!!!). (Good luck with exports.) Eventually of course I have to die, so I imagine I’ll have to find a place to do that, but in the meantime, I am sitting amidst cardboard boxes and rolls of bubble wrap, a very familiar place for me.
Presumably, you’re going in the direction of kitchen cabinets that fall off on a scheduled basis.
Or at least all fall off together so we could achieve some uniformity.
If you are handy, you can use gummint subsidized house investment to great advantage. Every dollar of your sweat-equity invested in kitchen or bath remodeling will end up multiplied into great profit upon sale, all the while you enjoy taxpayer-subsidized housing and a job that earns you real dollars and allows you to avoid lots of income tax and all those wasted FICA taxes.
Housing is just about always, except in the case of the long term demographic trend you cite, consumption. Counting on other drivers of value increase is speculation; the carrying costs have increased too much relative to the demographic.
As for Jan’s observation, I couldn’t agree more, but that is not something to be priced. Its priceless.
Timely post!
As it happens, we (five of us) just moved out our rental house (~3000 ft^2) into a 300 ft^2 motorhome. We’ll be living in this and traveling around the US and Canada or 1-2 years depending on how the money holds out.
Point being: Home is about people, not structures.
Home can be something on wheels (like Andy’s situation). Or, it can be a structure you care for, plant a garden around, paint rooms colors decided by your children, host family/friend events, holidays and celebrations. Like Drew said, home is “priceless,” especially when you create a meaningful living space filled with the passion of living a self directed life.
I envy you, Andy, although talk about consumption. I’ve been trying to convince my wife to get one and just travel at will (taking in great golf courses as we go of course). Although the most spacious, I just can’t get past the Class A driving and access issues. Trying to decide between a relatively large C, the iconic Airstream in about the 28ft range (but trailing can be an adventure) or one of those newer Mercedes mega vans. You can trail a car with the C and Mercedes. Helpful.
Her: “shut up and let’s build a house.”
When I was a kid my family owned a small trailer in which all four of us crammed into for 6 weeks, every summer. We usually explored all the National Parks, with Yellow Stone being my Mom’s favorite. It indeed was an adventure, which, at the time I didn’t fully appreciate enough (as I would have preferred spending those weeks at the beach with friends).
In the early stages of our marriage my husband and I camped in a VW van. I think I prefer vans more than trailers, in that they are smaller to maneuver and you don’t have to haul any secondary vehicle behind you. It is fun being fancy free on the road. And, once you get started, it seems one’s comfort zone is altered, relying less on material things, while being generously compensated by the ever changing views, experiences and people encountered on a daily basis.
“while being generously compensated by the ever changing views, experiences and people encountered on a daily basis.”
That’s the allure.