> I understand some people treat their home as savings but that's bad in every way for society and for the homeowner. I have a home and the only return I expect on it is to be able to continue living there. I'm certainly not going to depend on it for my retirement, as that would be really unwise.

How else can we think about an expense of hundreds of thousands of dollars? It's ludicrous to spend that much on something assuming it'll just depreciate and fall apart on you, worthless. I understand that you're not paying rent in a home, so it's serving a purpose, but they aren't exactly equivalent in terms of upkeep and taxes.

At this point, given the instability in the market I have no idea what is the wise move to put money into for retirement. Investments have tanked and I don't know at what point they'll recover, interest rates are abysmal, and apparently our homes should be worth nothing. There's really no practical, accessible way to invest.

> At this point, given the instability in the market I have no idea what is the wise move to put money into for retirement. Investments have tanked and I don't know at what point they'll recover

With all the instability of a once-in-a-century pandemic, the S&P is still up 1% today from where it was January 1. Specific large companies' stock like Amazon, Apple, and Tesla are up 50-300% since January.

The issue of saving for retirement is complex, thinking on a 10-40 year horizon as the world continues to change and evolve. But this is a bizarre time to be complaining about stocks as an investment.

Except investments generally haven't tanked. NASDAQ is at an all time high... again. In general, if you held or bought more during the March crash, you'd be up now. Every investment I made then is up double digit percentages, some way more. The market is completely divorced from reality. I haven't seen gains like this since the 90's.

>How else can we think about an expense of hundreds of thousands of dollars?

Cars depreciate. Rent, medical services, and groceries don't return any money when you're done using them. Houses should be thought of as consumption first and a store of value second. Sure by buying as soon as you can you are betting on appreciation in value. Houses aren't a good investment compared with even a bond mutual fund. There's a 6% transaction cost, closing costs, you have to pay mortgage interest, property tax, maintenance, insurance, utilities, and maybe even PMI. A single event like a hurricane or unfavorable neighborhood evolution can wipe you out (extreme concentration risk); a single bond issuer declaring bankruptcy is a risk that can be diversified away.

From a public policy perspective, encouraging home ownership was arguably a mistake, but that is a seperate issue.

Rental properties are normally cash-flow positive, including payments on their mortgage. This means that buying a comparable unit that depriciates to $0 over a period of 30 years is still expected to be a net positive.

> How else can we think about an expense of hundreds of thousands of dollars?

I’m saying buying a home shouldn’t cost that much. See here’s the insidious thing about housing costing so much - when you were younger you surely didn’t want to spend so much on a house. You don’t want your kids to spend so much either. And if you didn’t spend so much you would never have cared so much if it drops in value.

But now that you have spent that much, you want it to cost the same, even though that perpetuates a system that punished you, your kids and your grandkids.

Do you really want to defend this? Does it boil down to yeah it sucks that houses cost so much but now that I have mine I want to slam the door on the younger generation?

If homes were not treated primarily as investments, I don't think you'd be spending that much.

And note that this isn't about things depreciating and falling apart. It's more about various policies that affect house prices indirectly. The existing arrangement, when you distill it down, pretty much means that once somebody becomes a homeowner, they have an economic incentive to make home ownership for other people as hard as possible, because it props their investment (and if they own more than one, and rent some out, lets them raise the rent higher).

That's the irresistible force (drop in salaries) meeting the immovable object (bank valuations of real estate). It's impossible to see how this is going to be squared up. On one hand, banks cannot possibly be allowed to re-value what real estate they have on their books, else they'll have to declare bankruptcy, on the other hand, wages have dropped spectacularly, and people need some sort of roof over their heads.

> banks cannot possibly be allowed to re-value what real estate they have on their books

Tell me more about this? Why can't banks re-value things that constantly change in value?

The next fragment, "else they'll have to declare bankruptcy", is pretty much the answer. And as we learned in 2008, they're also "too big to fail", so that won't be happening.

Everyone still wants to live in cities. Firms want to settle in cities. If shops close, it wont change much.

If the shops close, do people still want to live in cities? Isn't that part of the point of living in a city - that you have all these businesses easily within reach?

It's the jobs. People didn't migrate from rural to urban in the last several hundred years because they wanted the shops, they went where the highest concentration of jobs were. Moving to a rural area won't help people find jobs.

You mean the jobs that are likely to be at least somewhat less location-dependent coming out of this? (Not arguing for 100% remote or anything like this but still a fairly major shift. I certainly know plenty of people who have already moved out of cities to quite rural locations.)

I think this is another case of knowledge worker myopia. With the exception of Amazon, you can't really work retail remote. Those workers who can work remotely now can leave at any time, that's right, and there has been a bigger shift for them, but we can't pretend that the majority of workers are remote workers. The people who had to come to the city for work, people who worked in retail or in industry, those types jobs aren't moving back rural. You can't work a factory where one isn't and you can't open up retail locations in the middle of nowhere.

Certainly, I'm specifically talking about the highly-paid knowledge workers in cities. But if they move out to any large degree that cascades. You don't need the higher-end luncheon spots and other amenities those workers use at that point. There aren't generally factories or distribution centers in cities.

It may even be a positive for some of those workers to the degree prices go down, albeit with fewer high-end restaurants and so forth and fewer co-workers.

You could see commercial real-estate be converted to residential.

How much does that cost, and is anyone going to pay that cost when residential rents are also falling? Commercial property is so different from living quarters that I wouldn't be surprised if "conversion" isn't actually possible, short of just razing it and building from scratch.

I've seen that conversion in Silicon Valley.

There is the Valco mall in Cupertino being demolished for mixed use residential, retail and office space. That mall was dying for a decade.

https://revitalizevallco.com/

Then there is Santana Row in San Jose. Used to be a strip mall as I recall. Now its high end shopping and residential.

https://en.wikipedia.org/wiki/Santana_Row

In practice unfortunately most attempts seem to get aborted as zoning requirements differ too much to be economical. For one the plumbing tends to come with per resident requirements for the units they wish to sell for health code reasons of wanting a shower, toliet, and bath.

Going more "dorm" style could work for low end if there wasn't a pandemic and even then it would carry plenty of risks that would scare people away from such an arrangement let alone the consumer desires.