The difference you’re not accounting for is that when someone buys a house, in practice they value it as an asset that must increase in value, not simply as a way to offset rent costs, which is effectively what you’re saying.
Thats the real problem. People believe their 500K house must go up in value and not fluctuate in value like any other marketplace of goods would see, and therefore are in opposition to anything that reduces the value of the home in which they live.
That’s why homeowners routinely bend over backwards to maintain home values. The general consensus society has is it’s one of the primary nest egg assets, and for many it’s their biggest one and they act in that self interest.
Real estate lacks the functioning market dynamics you see in every other area of economic activity, in part because we have collectively as a society decided long ago to adopt policies that would enshrine protecting home values above other concerns.
Edit: This also captures capital in an unproductive manner because real estate doesn’t have functioning market dynamics.
Imagine instead of having ever increasing real estate costs (the reality of todays world) which benefit only a finite fraction of economic investment but make up a huge total of the average persons expenses, that productivity gains could instead be captured by other investments like stocks. You’d have more people able to invest in companies, meaning there well could be more companies to invest in, increasing the health of other markets in turn. People will put their money somewhere and naturally a productive business is one such place afterall
Instead, one of life’s biggest overall expenses not only increases over time in aggregate but the value is captured by an fraction of the population of that increase, which is really a net loss to economic activity more broadly
Thats the real problem. People believe their 500K house must go up in value and not fluctuate in value like any other marketplace of goods would see, and therefore are in opposition to anything that reduces the value of the home in which they live.
That’s why homeowners routinely bend over backwards to maintain home values. The general consensus society has is it’s one of the primary nest egg assets, and for many it’s their biggest one and they act in that self interest.
Real estate lacks the functioning market dynamics you see in every other area of economic activity, in part because we have collectively as a society decided long ago to adopt policies that would enshrine protecting home values above other concerns.
Edit: This also captures capital in an unproductive manner because real estate doesn’t have functioning market dynamics.
Imagine instead of having ever increasing real estate costs (the reality of todays world) which benefit only a finite fraction of economic investment but make up a huge total of the average persons expenses, that productivity gains could instead be captured by other investments like stocks. You’d have more people able to invest in companies, meaning there well could be more companies to invest in, increasing the health of other markets in turn. People will put their money somewhere and naturally a productive business is one such place afterall
Instead, one of life’s biggest overall expenses not only increases over time in aggregate but the value is captured by an fraction of the population of that increase, which is really a net loss to economic activity more broadly