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Comment by RugnirViking | Hacker News Reader

People don't say home ownership is important because it's an asset for retirement; if you sold it, you wouldn't have a home in retirement!

They say that because owning a home allows you to reduce your bills, but also more crucially and viscerally because owning a home allows you to be free and have a place that is truly yours to do with what you will. You can paint the walls, have a pet, host a party, knock down a wall and build an extension, do whatever you like to make your mark on it and the world. It's yours and if you will it, it always will be. It's a level of peace and security that's almost incomparible. There's a reason in most of history there was a distinction drawn between bonded peasants and freeholders.

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I think you listed great positives for ownership. I would agree with those. But the parent is correct that, at least in the USA, owning a home is considered a financial investment that should appreciate in value. I think treating a house as a financial investment leads to all kinds of bad outcomes, and here we are.

"People don't say home ownership is important because it's an asset for retirement; if you sold it, you wouldn't have a home in retirement!"

It's very common in the USA. A married couple has some kids and buys a house big enough to accommodate them comfortably. 20ish years later, the kids have moved out and the parents don't need such a big house. They also are about to or have recently retired, and they would like to stretch their retirement money. Sell the big house, make a lot of money, and then buy a smaller, cheaper house. In the USA this pattern is pretty common.

This pattern has been disrupted because of the decades of under-building. The neighborhood I grew up in around an elementary school is populated by empty nesters and has been for over a decade. There is nowhere for the empty nesters to downsize into that isn't 3-5x what their mortgage is on their family sized home (in CA we also have the complicated of Prop 13 on property taxes) so they aren't moving. My highschool recently shut down because there weren't enough families in the neighborhood around it anymore.

I think things are breaking, for sure, but how badly and in what ways is very local. To your point (and my point, a bit), with current market conditions, many homeowners are staying in their homes rather than moving. We had a pretty long period of very mortgage rates, and now rates are higher. Home prices have not decreased, either. So someone with a home that is a little too big has something valuable that they want to hang to, and buying a smaller house is, at least for now, not necessarily a good financial decision. But if housing were not an investment, a elderly retired couple could just move to a smaller house and not think too much about it. But it is an investment, so they stay in their unnecessarily large house hoping the market changes in their favor.

Also, it’s a risk hedge. In many very populous areas property tax increases are capped.

This allows someone to quite concretely limit their housing costs in retirement (a large portion of anyone’s expenses!) in a way that is impossible in almost any other way. The only other similar types of deals are specific types of rent control in very limited metro areas.

That is huge.

Even if property tax increases are not capped, they are generally a fraction of what the house payment would be. (though after 30+ years of inflation the tax is what the original house payment was)

Generally if you rent your share of property tax in the rent payment is higher than an equivalent house share would be Tenters don't see how property tax affects their rent and so they generally don't oppose property tax increases, if they even bother to vote which they are less likely to. To be fair, how tax affects tax is complex - rent is supply and demand first, things like taxes put a floor on prices and so affect supply but this means it is indirect and so hard to see even though it will catch up eventually.

Almost no one is still making house payments in retirement. Those that are, almost certainly got that mortgage decades ago and it’s now a tiny fraction of current rental prices.

"Buy a home, pay it off, then downsize to generate funds for retirement" is a pretty widespread approach.

> "Buy a home, pay it off, then downsize to generate funds for retirement" is a pretty widespread approach.

[citation needed]

> The majority of retirees don't relocate. A 2015 analysis (the most cited historical data) from the U.S. Census Bureau’s American Community Survey showed that only about 5% of Americans age 55 and older move annually (local or long-distance).

[…]

> A more recent study, from Hire a Helper, showed that in 2024, only 22.7% of all retirees (both new and existing) moved, compared with 25.3% in the year before.

* https://www.kiplinger.com/retirement/retirement-planning/myt...

Lots of folks say they want/plan to downsize though:

* https://www.usatoday.com/story/money/2019/05/21/home-buying-...

And of the half that say they are moving, half (25% of total) "want their next home to be the same size as their current one, and 22% want it to be larger".

Those are perfectly good reasons and in the hypothetical world of housing affordability such utility should compensate for the depreciation. Similarly many people find value in owning a car despite the nearly guaranteed decline in value. Ideally neither would be viewed as a wealth-building tool.

It’s all this but don’t underestimate predictability. If you own a home with a fixed rate mortgage you know what your payment is and it doesn’t change. You know where your kids are going to grow up.

Sure you might need a new roof and insurance and taxes fluctuate but that’s a BIG BIG deal as anyone who’s rented and been at the mercy of markets can tell you.

This is even more true now as the rental market (like so many markets) is coming to be dominated by corporate landlord La using revenue extracting software.

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