Crashes happen periodically in just about everything: commodities, real estate, currencies, equities, bonds, etc. People invest in them because overall return is still expected to be positive.
I don’t think this is actually true. Assume zero GDP growth and zero change in the ratio of income from capital and income from labor. The share price of your stocks does not increase or decrease, but they pay you an annual dividend. The return is still positive even under overall stagnant conditions.
First, most people buy a house to live in and not as a pure investment. Second, all markets periodically crash (including equity markets promoted on LW as the ideal destination for one’s money) and that clearly doesn’t stop people from investing in them.
Tangential question:
If it’s to be expected that the housing market will periodically crash, why does it still get people investing in it?
Crashes happen periodically in just about everything: commodities, real estate, currencies, equities, bonds, etc. People invest in them because overall return is still expected to be positive.
...assuming either a constantly growing economy, or a constant flow of wealth from those without investments to those with them.
I don’t think this is actually true. Assume zero GDP growth and zero change in the ratio of income from capital and income from labor. The share price of your stocks does not increase or decrease, but they pay you an annual dividend. The return is still positive even under overall stagnant conditions.
First, most people buy a house to live in and not as a pure investment. Second, all markets periodically crash (including equity markets promoted on LW as the ideal destination for one’s money) and that clearly doesn’t stop people from investing in them.
Huge tax benefits in the U.S.