Why should it be an attractive financial asset if you do live there? Why shouldn't it just be a depreciating asset like a car (which it would be if land was taxed effectively)?
That way, we could invest in productive assets instead of land.
That way, we could invest in productive assets instead of land.
Housing is worse than "land". The building itself is inherently depreciating, yet many think that they "invest" when they get a new kitchen or bathroom.
For example, if one buys flour, and bakes a cake that a classic depreciating asset. In two or three days, that cake will be worth less than the flour that went into it. However, if you sell it today to someone having a birthday party then you may make 3x on your investment.
Buildings work the same way but with a longer timeline. That’s why developers build houses then sell them with the land, and don’t just sell land. It’s also why home owners invest in their own houses.
If one builds a kitchen in their own house, they get to use it during part of the depreciating timeline. Let’s say kitchen costs 10k, they use it for 5 years and it’s depreciated to 5k worth. Now so long as it doesn’t cost 5k to raise it back up to 10k worth, then they have gained if they sell the house. Alternatively, they could rent out the house for 5 years at a higher rate because it has a kitchen.
Like the cake, housing is an asset class where more strategies apply to it than “buy and hold”.
Near me, $10k-$20k of landscaping can go a long way in affecting the listing and eventual sale price.