Re:Falling Home Prices Could Be a Good Thing
by maxsilver on Saturday February 11, 2017 @10:21PM
(#13626478)
> Houses can basically last an arbitrarily long amount of time and still remain functional. With most things, like a car, there is some nebulous end of life where its value is effectively $0, and the value of that thing will steadily decrease over time until it reaches that point.
That's equally true of housing as well. Come on up to Michigan, I can walk you though entire neighborhoods filled with homes that are all functionally obsolete and valueless.
Homes actually get worse -- a home can have negative value. If an empty lot costs $60k, it's not uncommon for a house on an equivalent lot to be only worth $50k, because it's assumed you'll have to spend $10k to properly demolish and dispose of the existing home before the lot becomes usable. In this scenario, the homes value is effectively negative $10k.
Homes don't hold their value, land and zoning does. And with prices as crazy high as they are today, the actual home cost is almost an afterthought. I suspect if land and zoning actually became affordable, more people would opt to toss and rebuild their old homes with new modern ones, similar to Tokyo residential development.
That's equally true of housing as well. Come on up to Michigan, I can walk you though entire neighborhoods filled with homes that are all functionally obsolete and valueless.
Homes actually get worse -- a home can have negative value. If an empty lot costs $60k, it's not uncommon for a house on an equivalent lot to be only worth $50k, because it's assumed you'll have to spend $10k to properly demolish and dispose of the existing home before the lot becomes usable. In this scenario, the homes value is effectively negative $10k.
Homes don't hold their value, land and zoning does. And with prices as crazy high as they are today, the actual home cost is almost an afterthought. I suspect if land and zoning actually became affordable, more people would opt to toss and rebuild their old homes with new modern ones, similar to Tokyo residential development.