To be clear, I understand what inflation is, but something that’s only keeping up with inflation doesn’t make sense to me as an *investment.* I can understand increasing value by actively doing something, like fixing the roof or adding an addition, but not by it just sitting there.
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If the demand increases, then the land where the house sits becomes more valuable, and overall the house costs more (despite being older).
Notice that you may have the perception of houses always increasing in value, but there are a lot of places that lose value because demand decreases (industries relocating, etc). You don’t see these because typically there are no transactions connected to these houses: whoever owns a old house in a place of low demand just keeps living in it and passes it to their heirs. Sometimes they sell it at a loss. In contrast, houses in high-demand areas pass hands often.
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