I agree with those two facts, but there are several other facts that are part of the equation (the main one I already pointed to) that change things. Also, @jerosen 's point is important as well and I don’t think you have thoroughly addressed it.
Are there places where land appreciation is higher and building appreciation is lower? Sure. But, those places don’t make up enough of the country to make the “generally” statement about homes being depreciating assets true.
Also, another point you tried to make earlier that I never countered, but meant to. Houses don’t generally have a limited lifetime. If that were the case, you would see a lot more demolitions happening than currently do.
Your size/style argument doesn’t change the fact that if you can build the same house, brand new, for cost + inflation, and that new house would be worth more than the existing house, then the existing house is worth less than cost + inflation. I don’t understand what part of the equation you’ve pointed to that changes that fact.
I guess. This is just a matter of opinion on what’s worth considering. I’m obviously not alone in thinking it’s a worthwhile topic to consider.
They absolutely do. 100yr old houses cost way more to maintain than new ones, on average. For a relatively new house, I’ve been assuming that minor maintenance can be lumped in with cost of living (ie offset vs the utility). But as the house ages, the maintenance required becomes much more significant, and is literally the cost of depreciation.
One reason you might not see that many all-out demos is that you can often replace each part of a house incrementally over time. But at some point, you’ll have spent as much as it would cost to rebuild the whole thing anyway.
Yes they can/ often do. But thats not the same as having a finite lifespan.
And many old homes have been refurbished /remodeled more than once over the years such that many are just as usable as 2-3 decade homes.
e.g. the 100+ year old knob and tube wiring is all gone long replaced with regular copper just as good as any home built in the past 50 years.
eta: btw, I do own 2 properties built >100 years ago and regularly pay their maintenance costs. They do not cost more to maintain on an ongoing basis than our other property built in the 60’s.
e.g. a roof lasts as long as it lasts for a 10, 20 or 100 year old house.
It pretty much is though. I can keep replacing each part of a car and it’ll run forever. Doesn’t mean the car doesn’t effectively have a finite lifespan.
Your claims are all academic. In the real world, generally speaking, cars built from 1901 to 1990 that haven’t been wrecked have been junked. Yet in the real world, generally speaking, homes built between 1901 to 1990 that haven’t burned down are still being used today.
I definitely said that houses depreciate way slower than cars, so this isn’t a reasonable comparison. Are there many houses still around from 300 years ago?
I think the typical assumption for depreciation is loss in value over time without replacing parts. It might be hard to pin a specific finite lifespan on a house, so you’d probably say it’s something like the average lifespan of its components. Regardless, it has a lifespan.
No, but that’s mostly because of fires, not because the houses had a particular lifespan. How many homes built since we’ve had reliable electricity transmission have been torn down compared to how many are still standing?
Can we split the baby? Homes have a finite lifespan but they can vary by literally hundreds of years so there is no “general” lifespan to a home and it is nearly impossible to estimate the lifespan of a home built in the past 50 years.
According to my insurance bills, building costs have increased faster than inflation.
Only because generally the new homes are bigger. If you re-built a house in a 50-y-o neighborhood using original specs, then I doubt it would be worth significantly more than the other houses in the neighborhood. I personally use rent potential to determine the total value and I’m certain that renters don’t care to pay more for a brand new house than for a similar old house next door. You can take an old house, install new floors, fixtures, update bathrooms, kitchens, appliances, and paint inside and out, and nobody will know or care about the age of the structure.
Except I can sell that fully depreciated house after 30 years and the new owner gets another 27.5 years to depreciate it again. And this depreciation does not affect the assessed value of the structure.
By that defintion a car has an unlimited lifespan. If the car body gets rusted out you can just replace the body. Many things are uneconomical to repair like termites, mold, and foundation issues.
Most houses being built today are junk that is thrown up as cheaply and quickly as possible. On a brick house the brick supports the entire structure. Today’s construction consists of wood framing that is anchored to a brick veneer wall to prevent the brick from falling over.
and the 27.5 figure is just a number that the government pulled out their rears.
Just a few months ago they were seriously thinking of changing it to 25 years for no apparent reason other than giving some real estate investors a tax break.
Can confirm old houses are a lot of maintenance - reglazing windows, painting, refinishing floors, etc However, in some cases that maintenance is cheaper than the replacement which is what people who don’t live in 100 year old houses have to do (vinyl windows get replaced vice reglazed, laminate floor gets replaced vice refinished).
Also, my American Foursquare looks dope as hell - the OG Open floorplan.