> In the US at least, the home is one of the major mechanisms of increasing wealth over lifetime and inter-generational wealth.
That's mostly because of land values, not building values. And it's largely not a natural occurrence, but it's due to NIMBYism and property tax regimes designed so that young people will pay for all the services used by retirees.
This is wild. If what you said is true, then there would be no appreciable value to be extracted by flippers. Their entire schtick is built around what you are saying being untrue.
I’m sure you have reasons for believing this, but I cannot fathom it.
Put another way, look at what empty lots sell for, and compare that to what a similar lot with a (not dilapidated) house sells for, in areas where the land values would be similar.
The only exceptions I could imagine perhaps being the places with crazy property values. But, the US is large (so, not just San Francisco)
The 'move in' appeal comes into play. While the land/location may be great - places with the lime green toilet and 70's shag carpet will require renovations to be considered current. The flippers are doing the work - usually the unusually dated bits - for less than what the buyers would think that remodeling would cost. (and they are often correct) That delta is why flippers can make it work. At a certain price point, folks expect a house to be finished.
We picked up a house that needed updates. A few miles from work (were I to drive in) and on a lake. When we looked at the house, it showed terribly. We had replaced our bathrooms and a few other 'major' things in our previous house, so what might scare some folks is a few hundred to a few thousand at home depot and some possibly long weekends. Chunk by chunk, we've been making the house the way we want it.
I should be doing some drywall this long weekend. Way to dang cold to go out and pick up supplies.
I'm happy to believe that flippers are mostly deluding themselves.
> Put another way, look at what empty lots sell for, and compare that to what a similar lot with a (not dilapidated) house sells for, in areas where the land values would be similar.
Interesting. I can’t speak to how it works in other countries; in the USA so much context is loaded into home ownership. I don’t know the Japanese “sticks and carrots”.
The one factor I could imagine is if cost of land is so expensive that anyone who could afford it is going to be wanting to do a ton of customization anyway.
Are you talking about rural Japan, not just e.g. Tokyo? What systems exist in Japan that make the building worthless?
That's not by definition, although it is how social security works.
Retirees have assets but not income (or they have low income). Younger people are the other way round. So depending on how governments use income taxes vs sales taxes vs property taxes it changes who pays for things.
California is the worst about this because of Prop 13, which basically means if you don't move then your property tax is much lower than it should be and newer residents pay for you.
Who else would pay for retirees, if not the non-retirees?
Most of their assets are paper value, because they are located in stocks, their only home (and they have to live somewhere), etc… that if sold en masse would simply get pennies on the dollar or require expenditures elsewhere.
That's mostly because of land values, not building values. And it's largely not a natural occurrence, but it's due to NIMBYism and property tax regimes designed so that young people will pay for all the services used by retirees.