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Comment by alphabettsy | Hacker News Reader

> Why does a person invest in land? Because they expect something to flourish in the vicinity of their land, and they'll be able to capture some of that increased productivity in the form of rent (or appreciation).

Most people buying land are not doing it as a speculative investment. There are many who buy real estate as an investment, but most people buy real estate for personal use. Even those who buy real estate as an investment they typically make money from improvements whether that’s farming or residential.

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Maybe they wouldn’t articulate it as speculation but that’s still what they are doing (even if they are living in the property). They are speculating that the value will not decrease, or that rents will increase. Otherwise they’d rent.

ETH does have a return currently of ~5% through staking.

People living in the property are almost always buying it as both a place to live and as an investment.

Investment is not the same as speculation.

Even without guaranteed appreciation in value people will buy homes because they have an asset compared to alternatives like renting. When renting you’re guaranteed a loss on rent paid.

I expect my property, my house and yard, to appreciate less than the S&P 500. I expect the value of my property to go up a little, but not a lot. By choosing to buy property, instead of living in the cheapest rental I could find, there is an opportunity cost. And I'm OK with that.

If money was the only goal, renting something extremely inexpensive and investing would give me a better financial return.

It's all relative. If home prices drop while you're renting that's a huge gain relative to owning property.

You’re right that it’s all relative, but that’s not necessarily true.

Where I live buying is much cheaper than renting and even if my home is worth 25% less than I paid for it by the time it’s paid off I can come out ahead because I still have an asset worth let’s say $100k and I’ve spent less money than I would renting. That’s without factoring in the other reasons people buy homes.

If your home is down 25% isn’t all or most of your equity “gone” anyway? Guess it depends how slowly, but if it happens immediately you basically lost your entire down payment

Thats just homes, there are tons of other property classes outside of personal residential.

> They are speculating that the value will not decrease, or that rents will increase. Otherwise they’d rent.

That assumes you're getting the same product, but when renting you don't necessarily have any guarantee that the lease will be renewed when your rental term is up. Owning your own home is a more stable arrangement since you generally face no risk of eviction as long as you keep up with any applicable mortgage and property tax payments (barring exceptional circumstances such as eminent domain).

If you expect to move frequently then it might come down to just rent vs. mortgage and property value, but if you intend to stay in one place for the long term then ownership has other advantages to offer.

> you don't necessarily have any guarantee that the lease will be renewed when your rental term is up

Yep, that's exactly my point. It cuts both ways because your landlord also has no such guarantee; if prices decrease then the commitment is a liability not an asset. It just depends on the situation.

Disagree.

Most people wouldn't pay the exorbitant interest, taxes, mortgage paper fees if they didn't think they'd get appreciation on the property — "like always!".

They don't need to get appreciation, they just need to have the home be less costly than renting. Once you throw in the mortgage interest deduction that's a pretty low bar.

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