Well, I meant individuals don't just get to decide something is an investment. Certainly society as a whole, or even a large bloc of voters can decide something is an investment.
Behaviour by the rest of society is influenced largely by public policy.
In Ireland, investing in Housing/Land is largely one of the best investment assets you can own due to the lack of Capital Gains or Deemed Disposal rules.
This is such a cop out response. Even if we want to pretend there are no other investments, the real question is why don’t we just upzone cities end build more housing instead of artificially constricting supply so the baby boomers can get rich off the younger generations.
Only now are we starting to see actual democratic referendums on these topics. For a long time everybody was brainwashed into thinking more construction = “greedy developers”, so nobody treated adding to supply as a possible solution.
But the tide is starting to turn, and in a lot of state/provinces you are starting to see real change it last. British Columbia will soon up zone province-wide for example. And slowly you are starting to see some good initiatives passing in California.
In the context of Australia, voting is mandatory if you're >=18yo.
We also have very unusual tax laws around owning a rental called negative gearing- if you're a landlord and your rental property earns less than it costs to run it, you can subtract the difference from your taxable income and pay less tax, as if having a tenant pay off most of your mortgage wasn't enough of a free lunch.
A political contest vowing to get rid of this nonsense was annihilated when we tried it one election cycle around a decade ago.
That's not unusual at all, and calling it "negative gearing" is just a way to target it as if it's some evil concept.
Afaik, everywhere in the world taxes on businesses are applied to profits not revenue. Subtracting your loss is completely normal. It's personal taxes that applies to your salary aka revenue that is weird and modern day serfdom.
> aka revenue that is weird and modern day serfdom.
Not really, though. Businesses have inherent incentives to minimize their costs. Individuals don’t, in fact it’s closer to being the opposite.
So the “revenue” tax approach is perfectly rational and reasonable (relatively to taxing personal “net income”)
> businesses are applied to profits not revenue
Yes, if your rental business was a separate entity it would make perfect sense. Subtracting your business costs from personal income isn’t quite that though
People don't want low end housing built in their neighborhoods.
Further, the cost of development has gone up rather drastically. In some cases, 10x in as many years, making building low cost homes financially impossible.
Then there's the issue with tax collectors (politicians) preferring to have expensive homes built instead of low cost housing so they can collect vastly more tax to spend on themselves.
>People don't want low end housing built in their neighborhoods.
The problem with this reasoning is that housing has gotten so expensive in many cities that anything that costs less than $750,000 can be considered "low end".
Polls show that most people want more housing built. The problem is homeowners don't want it built in their neighborhood. Everyone wants to pass the buck to somewhere else.
That's why it's no longer possible for residential zoning to be determined on a neighborhood-by-neighborhood basis. States have to step up and come up with minimum zoning that reflects the state's larger interests rather than letting every block fight to "preserve" a historic gas station etc.
Housing is not the only way to escape inflation. There are several government bonds in the US that are fantastic for that. As would any productive investment.
Housing (or rather, land) is unproductive investment, and should be treated as piggy banks, not as a place where wealth grows like investments do.
> A 2014 study found that conventional U.S. Treasury bonds were persistently mispriced relative to TIPS, creating arbitrage opportunities and posing "a major puzzle to classical asset pricing theory."[22]
You seem to know things, is that arbitrage hustle still producing?
I don't have a good source of inflation swap prices, but I would assume it's persisted. It's not an easy trade to do leveraged, since your assets are marked to market. And there are natural buyers of vanilla Treasuries for collateral purposes.
Real estate is a very high maintenance investment relative to stocks. The real reason people invest in real estate is because they can walk into a bank and get a low interest rate 30 year loan to buy that investment, which is not going to happen with any other investment class.
People also invest in real estate mostly for the land, not the housing. Land is a scarce resource in growing cities. Demand goes up, supply stays the same. Building high density housing actually makes property more expensive, as it can command higher prices from developers.
If they just wanted to escape inflation on a pure cash investment, real estate isn’t a great way to do that.
> This is true in the US but it's not true in other Anglophone nations with high real estate prices such as the UK or Australia
It was definitely true until very recently. Interest rates of 1-2% weren't unheard of. Many of my friends had to really tighten up their finances when their interest rate from 1.2% to 5%.
The low rates was true. But not the 30 year term. Most mortgages in the UK are fixed for 2-5 years so people are much more exposed to fluctuations in interest rates than in the US.
We have the same thing in the US for mortgages, called the adjustable-rate mortgage (ARM). It got a very bad rep after the 2008 housing meltdown so it’s generally seen as a bad tool for consumers these days. Hence the current predicament - many American homeowners refuse to move because it means giving up a sub-4% loan. Which is essentially free money because of the current inflation rate.
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