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Comment by JumpCrisscross | Hacker News Reader

Most Americans buy homes, not farmland. In that respect, the UK's "Safe as Houses" is worth a read.

Summarising many studies on the matter, across countries and over long time horizons, houses appreciate at the cost of inflation. Short-term swings are primarily driven by credit; a bet on house prices rising is a leveraged bet on credit quantity increasing, i.e. rates falling.

[1] http://www.newyorker.com/magazine/2006/10/30/safe-as-houses

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Are you unfamiliar with the concept of Leverage? Sure, having an investment keep pace with inflation isn't phenomenal, but in the US it's standard to put 20% down of the house value. So if inflation is 3%, I can realize 15% on my investment.

Except your mortgage interest may also be 3% so you may realize nothing on your investment.

Your interest costs will be proportional to your leverage so you need the asset to outperform your interest rate to realize anything.

Yes but this is a home, and not some generic investment.

I can either live in the home, saving livings costs (rent), or I can rent it out and generate income, which will pay for the interest on the loan.

Good point! I meant for your primary residence, you're paying that interest regardless of if you own a home or rent. So I don't factor that in when it comes to a primary residence. This is a different story for investment properties.

Your interest rate is likely higher than inflation, so you lose money on loan amount if the home just keeps pace with inflation.

Or inflation increasing, no?

There are better inflation hedges. Home prices are more volatile than those assets, e.g. gold.

Homes are also less portable. If you're worried about runaway inflation you're at risk of political failure. Makes no sense being anchored to the risk you're seeking protection from.

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