The Perverse Incentives Depreciating Your House
Posted by freedomforall 2 days, 23 hours ago to Business
Excerpt:
"The urgency of desire for a homeownership creates perverse, long-term incentives for both home buyers and builders. Rather than building homes that are intended to last, construction companies, lured by high present demand, will build homes from cheap materials and use techniques that prioritize speed. The drastic decrease in the size of a 2×4 since the 1920s paints a vivid picture of the decline in home quality.
The material quality as well as the design quality of homes has shot through the floor because homebuyers are not able to see the full risks of their investment. Because homes include the limited resource of land as well as a traditional durable structure, they have historically been a solid investment. Houses that were built over 100 years ago are often still hot commodities and they seem to constantly appreciate. Homes used to be built with the idea that they would last a long period of time and be repaired as they needed it. While each house is different, the public still mentally places them into one asset category when they are deciding whether to buy a home or not. Specific companies earn trust through years of repeated performance, and it would be easy to think that homes as an asset function the same way. Fundamental differences in durability will stratify houses into different categories of investment as buyers see how newly built homes disintegrate. "
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Conclusion: US Homebuilders are only concerned with short term profits and are building garbage structures.
The only new ideas that are adapted are those that reduce costs and produce shoddy construction that is invisible to most buyers.
Anything that makes a structure last longer is irrationally criticized.
"The urgency of desire for a homeownership creates perverse, long-term incentives for both home buyers and builders. Rather than building homes that are intended to last, construction companies, lured by high present demand, will build homes from cheap materials and use techniques that prioritize speed. The drastic decrease in the size of a 2×4 since the 1920s paints a vivid picture of the decline in home quality.
The material quality as well as the design quality of homes has shot through the floor because homebuyers are not able to see the full risks of their investment. Because homes include the limited resource of land as well as a traditional durable structure, they have historically been a solid investment. Houses that were built over 100 years ago are often still hot commodities and they seem to constantly appreciate. Homes used to be built with the idea that they would last a long period of time and be repaired as they needed it. While each house is different, the public still mentally places them into one asset category when they are deciding whether to buy a home or not. Specific companies earn trust through years of repeated performance, and it would be easy to think that homes as an asset function the same way. Fundamental differences in durability will stratify houses into different categories of investment as buyers see how newly built homes disintegrate. "
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Conclusion: US Homebuilders are only concerned with short term profits and are building garbage structures.
The only new ideas that are adapted are those that reduce costs and produce shoddy construction that is invisible to most buyers.
Anything that makes a structure last longer is irrationally criticized.
