Your home is not special. If the value of your home rises, the value of other homes also rises, which means for most homeowners an increase in the value of their home can't be turned into a profit.

If Alice buys a home for $100k and it appreciates $1M over ten years, and Bob rents for ten years for $100k, total. Alice has $1M more than Bob does. That isn't nullified if Alice chooses to buy a $1M home next. She can also go buy another $100k home instead and pocket the $900k. Bob, obviously, cannot pocket anything.

> She can also go buy another $100k home instead and pocket the $900k

No, that's my point. A home that cost $100k when Alice bought hers, now costs $1M, therefore if Alice sells her home for $1M and buys another one for $1M, she makes a profit of $0.

Bob, with a net worth $1M lower than Alice, would probably disagree that she has not profited.

Only if you do fraudulent accounting. Mark-to-market is limited to assets held for trading, as far as I can tell, and for a good reason.

If you sell your home for $1M more than you bought it, it would be fraud if you didn't consider it a gain.

If you sell it and become homeless, yeah. Otherwise you'll be buying a $100k home for $1M, which cancels out all the profits that you made from the sale.

That's not how profits work. Or accounting in general. If you sell for +1M and then buy a different home for $1M, you've recorded a gain of $1M. It doesn't matter if you spend it on another house or don't. Your balance of cash may stay the same, but you've still profited. And the gain is taxable.

That's the accounting profit. Suppose you keep the house, your accounting profit would be zero. If instead you sell the house, and buy it back immediately for the same price, now you have an accounting profit. From this example, it's obvious that the accounting profit can be misleading. What matters is not the accounting profit but the economic profit (aka actual profit).

This assumes you continue to own a home, and own a home in the same market.

You can downsize, rent, or relocate to realize profit.

There is a reason why they must go negative...

Inflation is going up because of a mix of supply shocks and fiscal stimulus. Not necessarily a bad thing but it's out of the realm of monetary stimulus.

Low interest rates in Japan failed to drive inflation. Ask any Austrian economist and they would tell you that low interest rates are guaranteed lead to malinvestment, an artificial business boom and high inflation. You know, if it was that easy then central banks would have raised interest rates a long time ago. Probably shortly after 2008. Whatever is going on is way beyond what monetary policy can do.

At 0%, monetary policy simply stops. Game over for monetary policy. Central banks do not matter anymore.

>You know, if it was that easy then central banks would have raised interest rates a long time ago. Probably shortly after 2008.

The Fed attempted to raise rates in 2011 which lead to the so-called "Taper Tantrum" where stocks plunged. The Fed either got scared, or received a phonecall, and promptly held off on increasing rates.

Why would I lend you a million dollars only to be paid back over 30 years and have less than I started with at the end of the 30 years? I'd be better off doing nothing with the money.

You wouldn't, but the government might - to keep the economy propped up. I think this is what parent meant, anyway.

Not sure that's a healthy point for the government or the economy to get to, but with politics the way they are these days it doesn't sound that farfetched of an outcome...

If things get to that point, the government might as well just buy all the housing.

It has already been done.

https://www.investopedia.com/articles/personal-finance/05141...

Because you don't want to keep 1 million dollars under your mattress.

Maybe I do if my other options are this bad.

Although if the reason the government is doing negative interest rates is to prop up home prices forever and ever, I guess I better put my money into housing.