Unpopular Opinion

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Homes and real-estate increasing in value should be considered inflation (sopuli.xyz)

submitted 9 months ago* (last edited 9 months ago) by [email protected] to c/[email protected]

11 comments fedilink hide all child comments

Housing is something people need, and is similarly a necessity like food or electricity. It needs a lot of money to keep in a livable shape, plus constant attention, and will lose its value if just left in place. As such it's not an investment, unless the market isn't working like it's supposed to.

When there was the long period of "low inflation" after the 2008 housing crisis, it's because we didn't consider housing prices a part of the inflation – if housing getting more expensive would've been taken into account we should've never had such a long period of low interest rates. If rents going up is inflation, appreciation should be as well.

As such, housing getting more expensive should be considered a bad thing, as it leads people to mistakenly see it as an investment. People will then "protect" their investment by trying to prevent new projects etc. Nobody would get angry if bread was cheaper the next day, just because they already bought it yesterday.

EDIT: apparently I've been a bit misinformed. I'm not from the US, but EU (Finland) and have understood that our indices don't really include owner-occupied housing in the calculation, but only the direct costs like energy and rent with some weight – which was at least partly the case, but there would seem to be some changes coming. Thanks for the enlightening replies, I'll have to read a bit more into it.

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[–] [email protected] 1 points 9 months ago

Yep, should've probably clarified that I'm personally not talking about the US. Housing costs are included in HICP (the index in Europe) but not the cost of purchase AFAIK, only the cost of ownership, calculated via more direct means like rent or energy costs.