I assume people will continue to use real estate as an investment for as long as they are forced to escape the inflation of their currency.
People also invest in real estate mostly for the land, not the housing. Land is a scarce resource in growing cities. Demand goes up, supply stays the same. Building high density housing actually makes property more expensive, as it can command higher prices from developers.
If they just wanted to escape inflation on a pure cash investment, real estate isn’t a great way to do that.
This is true in the US but it's not true in other Anglophone nations with high real estate prices such as the UK or Australia.
It was definitely true until very recently. Interest rates of 1-2% weren't unheard of. Many of my friends had to really tighten up their finances when their interest rate from 1.2% to 5%.
Housing (or rather, land) is unproductive investment, and should be treated as piggy banks, not as a place where wealth grows like investments do.
If so, that doesn't solve the problem for anyone who has the problem.
No, they're bog-standard Treasuries and, if you're particularly paranoid about inflation, TIPS [1].
Modern currencies segregate the store of value and medium of exchange functions. For the dollar, that means Treasuries and deposits.
[1] https://en.wikipedia.org/wiki/United_States_Treasury_securit...
You seem to know things, is that arbitrage hustle still producing?
I don't have a good source of inflation swap prices, but I would assume it's persisted. It's not an easy trade to do leveraged, since your assets are marked to market. And there are natural buyers of vanilla Treasuries for collateral purposes.
They absolutely do in a democracy in which they (home-owning baby boomers) represent the biggest demographic voting block.
In Ireland, investing in Housing/Land is largely one of the best investment assets you can own due to the lack of Capital Gains or Deemed Disposal rules.
But the tide is starting to turn, and in a lot of state/provinces you are starting to see real change it last. British Columbia will soon up zone province-wide for example. And slowly you are starting to see some good initiatives passing in California.
We also have very unusual tax laws around owning a rental called negative gearing- if you're a landlord and your rental property earns less than it costs to run it, you can subtract the difference from your taxable income and pay less tax, as if having a tenant pay off most of your mortgage wasn't enough of a free lunch.
A political contest vowing to get rid of this nonsense was annihilated when we tried it one election cycle around a decade ago.
Afaik, everywhere in the world taxes on businesses are applied to profits not revenue. Subtracting your loss is completely normal. It's personal taxes that applies to your salary aka revenue that is weird and modern day serfdom.
That’s what the tax office call it.
https://www.ato.gov.au/individuals-and-families/investments-...
Not really, though. Businesses have inherent incentives to minimize their costs. Individuals don’t, in fact it’s closer to being the opposite.
So the “revenue” tax approach is perfectly rational and reasonable (relatively to taxing personal “net income”)
> businesses are applied to profits not revenue
Yes, if your rental business was a separate entity it would make perfect sense. Subtracting your business costs from personal income isn’t quite that though
Further, the cost of development has gone up rather drastically. In some cases, 10x in as many years, making building low cost homes financially impossible.
Then there's the issue with tax collectors (politicians) preferring to have expensive homes built instead of low cost housing so they can collect vastly more tax to spend on themselves.
The problem with this reasoning is that housing has gotten so expensive in many cities that anything that costs less than $750,000 can be considered "low end".
Polls show that most people want more housing built. The problem is homeowners don't want it built in their neighborhood. Everyone wants to pass the buck to somewhere else.
That's why it's no longer possible for residential zoning to be determined on a neighborhood-by-neighborhood basis. States have to step up and come up with minimum zoning that reflects the state's larger interests rather than letting every block fight to "preserve" a historic gas station etc.