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>why are you then owed money? Why is that a fair expectation?

Essentially everybody in the US is continually trying to make their fortune by picking a winner instead of adding productivity and value.

Have your house appreciate.

Pick the right stocks.

Invest in the right company.

Become a landlord in the right neighborhoods.

Everyone wants to be a genius speculator instead of doing work.

I mean, agreed. And I don't think you can disentangle that from the fact that working is less beneficial to workers than it's ever been.

Not only do they want the value of the house to go up, but they don't want anything around them to change. No new 5-story condo complex on that one corner. My neighbor shouldn't add a second floor and block my view.

I think it’s worth pointing out that you and your neighbors actually do have a voice in local government. You don’t just have to sit there and take it. NIMBYs have realized this and actually show up to be counted. You can too.

"No change" is usually the much stronger behavioral driver than "increased property value."

"Don't turn this into Manhattan" is such a common refrain yet turning it into Manhattan would wildly increase their land value.

> "Don't turn this into Manhattan" is such a common refrain yet turning it into Manhattan would wildly increase their land value.

It sure would rocket the land value.

The flip side is that it is important to understand not everyone wants to live in Manhattan (or a look-alike). Some people moved out to the boonies specifically because they want to live out in the boonies.

If you take their view for a moment, which is good exercise in a debate: would you be happy if your house in the boonies is suddenly surrounded by high-rise apartment towers? It's not the boonies anymore.

> I do not now nor have I ever understood why people expect homes to rise in value.

This big obvious one is inflation. There will always be inflation (less, or more) so real property like a home can only ever go up in market price (unless the economy around it craters).

The second one is growth of the town. If you built a home 60 years ago in the middle of empty fields, it wasn't worth very much. Now 60 years later it is surrounded by lots of housing and a whole town. There is no economic model where it could possibly be worth less (assuming it hasn't been let to rot to be unihabitable, of course).

I’d expect property values to go up (or have gone up) as population rises; less space per person. I bet we could also put together some geometric argument about proximity to things like cities. But it’s the weekend, so let’s just halfheartedly gesture at the potential for rigor.

Anyway, nowadays population is barely increasing so I guess property values… maybe they’ll keep pace with inflation (for whatever reason)?

Another possibility is that property values tend to go up and down as some areas become more fashionable. Maybe, for whatever reason, there’s a selection bias where we tend to associate ourselves the trajectory of people who lived in those fashionable areas instead of the unfashionable ones?

> Why are you then owed money? Why is that a fair expectation?

Because getting the mortgage to buy the house involves parting with a large sum of money, after which some part of the mortgage payment goes towards something called principal. If it just goes towards interest, it may as well be rent.

Not to mention that when you try to sell the thing, there's some expectation by one or more third parties of some percentage of it.

But at the same time most people do the bare minimum to maintain their house, so the quality of the property continually decreases. I don't drive a car for 20 years and then expect to make a profit on selling it.

Your analogy might be applicable to the sale of an RV.

What makes a house that has set outside rotting for 30 years more valuable than the day it was originally purchased?

ChatGPT suggests the land might have appreciated, the neighborhood may be more desirable, inflation, or development potential. We don't need programmers anymore because LLMs can do it. It must be an expert on home values too.

I don't give a rats ass what ChatGPT said. Use your brain. Think for yourself.

Sorry, I don't understand. Can you explain again please?

Makes no sense to me. You take a loan to buy something you cannot otherwise afford, then you pay back the loan. Bank wants % on the loan, this is legal, therefore you pay back more than you borrowed. The amount gets split into two buckest, "interest" and "principal", presumably because of size and length of the loan, but arguably mostly to let the bank do various shenanigans that lead to them making more money on it.

Nothing in this gives any good reason for one to expect homes to appreciate in value, other than that some buyers want it to, and I haven't heard any good reason why those buyers shouldn't just be told, "no". If these people then decide not to get mortgages, due to it not being an investment, then all the better for everyone else, who want a home to live in.

The banks wouldn't write those loans for something they expect to go down in value.

I suppose you could always buy a mobile home.

They shouldn't care in the first place, except something in this arrangement makes them.

They do, because if you cannon keep up with the repayments, the loan (mortgage) is secured on the house. So the bank will take possession of the house & sell it as quickly as possible (because banks don't want to own houses), which means they won't get a great price. Additionally, when people can't make mortgage payments, it's likely to be a bad time for the economy, meaning prices of houses will be low. All this creates risk for the bank, and rising house prices reduce this risk (it is more likely they will recover most/all of their money if they need to). That in turn means they will lend the mortgage at a lower rate than otherwise.

My theory is that the "house" consists of two things: the land and the building.

The land goes up in value when other people spend money. More retail is constructed nearby, transportation is improved, schools improve, jobs are created, etc. My land captures some of that value even though I paid nothing. That to me explains some of the fairness of property tax: the owner should contribute to the government services, such as schools and police, that help make the land appreciate in the first place.

Then there's the building. It's a wood box that sits out in the rain and rots. Water soaks in from the outside and pipes burst on the inside. Termites eat it and insects and vermin invade. Carpet and walls slowly degrade. HVAC systems wear out. Appliances break. Concrete breaks apart. Even on the land portion, plants die and need maintenance. (Trees are the only thing on a property that get better with time.) This building needs constant maintenance and I'm always spending money and time on it.

So I figure the land might go up slowly in value over time. I figure I'm lucky if the building appreciates at all after I consider the money I sink into it.

On paper my house is worth a lot more than when I bought it. But I don't know how much of that is nominal price change due to inflation.

Is “inflation” not a valid answer? Or at least component of an answer?

It's an answer to why the number is bigger but not to why the house is worth more. It is common to say "I want my house to appreciate in value" and inflation doesn't mean it's appreciating in value, it just means the number is bigger than it was before. That's not the same thing.

PP literally says “I just don't see how people go like "My house needs to sell for more than I bought it for years from now"” That is basically not understanding why people expect the number to be bigger.

You can restate all mentions of "value" in the parent post to "real value", and there entire point still holds: why should people expect the real value of a home to increase over time?

> that nobody has ever adequately explained to me.

Jesus it’s not rocket surgery. People want to live in a nice area, as more people show up and want to live in a nice area prices rise with rising demand accordingly. For the counter example, there are very large houses basically for free in Detroit. No one wants them.

> For the counter example, there are very large houses basically for free in Detroit. No one wants them.

Is that true, or do they actually come with large tax liabilities?