why does a house not lose value similarly to a car when sold?
In: 3
1. Restricted supply. This is partly because physically isn’t room for more housing in good locations, but more often it’s because of NIMBYs blocking new construction, dumb zoning laws that artificially make land scarce, etc. In the face of inelastic demand (people ***need*** places to live), prices go up and up and up.
2. Some of the value is actually from repairs/upgrades made by the owner. ***If you just let a house sit and rot, the value will eventually go to zer***o. Those repairs cost money, so the house isn’t actually appreciating like a stock or trading card going up in price, in this case. Cars just fall apart so fast that it’s almost impossible to make them last longer than 25 years, no matter how good care you take of them.
Don’t believe the people who say “the value of the land goes up”. This is only true in certain places with very expensive land. If a house cost $200,000 10 years ago but costs $400,000 today, but the vacant lot next door only costs $80,000, clearly the cost increase of $200,000 did not come from the land.
Location is part of the reason why old houses are so expensive, though. New houses are usually built in crappy locations, so an old house in a good location can command surprisingly high prices.
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