Comment by CapstanRoller | Hacker News Reader

Comment by CapstanRoller | Hacker News Reader

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House prices do go down! Take Japan as an example: houses are considered a depreciating asset, like cars. It makes total sense: wood rots, metal rusts, etc. The land value is another matter, though.

For many people, the primary goal isn't lower house prices overall, but a change in approach to how we approach housing (especially zoning) in order to make shelter affordable.

It's not that everyone wants McMansions for cheap, but rather they want to see things built that are reasonable in size and affordable for normal workers. This could be anything from large concrete block apartments (they can be made cozy and nice!) to tiny house villages.

There are many great ways to live which are literally illegal to build in the USA due to archaic and regressive zoning laws, minimum parking requirements, etc.

https://www.youtube.com/watch?v=CCOdQsZa15o

https://www.youtube.com/watch?v=SfsCniN7Nsc

https://www.youtube.com/watch?v=0Flsg_mzG-M

> Take Japan as an example: houses are considered a depreciating asset, like cars.

Is there anywhere that doesn't consider a house a depreciating asset?

Housing differs from cars as it is much more common to see people rebuild houses back to new condition, to upgrade them to use modern technology, etc. That effort can retain the outward value of a house as you basically have a new house again, but the deprecation cost is paid during those updates and modifications. You haven't escaped it.

>Is there anywhere that doesn't consider a house a depreciating asset?

The USA

Yes, but technically - houses deprecate 1/27th of their value according to the tax code.

So, although no one expects house prices to go down - there is an implicit understanding that the actual house depreciates - even if inflation is offsetting that and the land underneath it is pumping the total value up.

Lets imagine the cost to build a house goes up 3% per year - if your house deprecates 3.7% per year - it would only go down .7% in nominal terms (3.7% in real terms).

If the value of the land is 50% of the "home" value, and that appreciates by 6% - then your "home value" goes up in nominal terms & real terms - but not as much as it would have if the house didn't need maintenance (depreciation).

japan has a steeply declining population. there is just less demand.

years of earthquakes have also meant the japanese have had to update their houses to newer codes, or else they just collapse. so it's common to just rebuild.

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