Re:The Rate of Return on Everything, 1870–2015 (2019)
by chii on Thursday June 13, 2024 @12:15AM
(#40665871)
> It's an expected gift for owning the house.
it's not a gift (implying it's free).
Owning capital has a cost - the cost of capital (aka, the cost of money). At minimum, the cost is the risk free interest rate.
The owner paid a pretty penny (or borrowed, at a higher than risk-free rate) to buy the property. The previous seller did the same, or invested capital in building the property itself. So therefore, "owning a house" is the last chain in a sequence of investments, all of which costs money.
it's not a gift (implying it's free).
Owning capital has a cost - the cost of capital (aka, the cost of money). At minimum, the cost is the risk free interest rate.
The owner paid a pretty penny (or borrowed, at a higher than risk-free rate) to buy the property. The previous seller did the same, or invested capital in building the property itself. So therefore, "owning a house" is the last chain in a sequence of investments, all of which costs money.