Consider my Tiny House project. I estimate it shall cost me 50-70k. The average house price in my area is quarter of a million euros and the total life long cost of a loan brings that up to half a million euros.
Instead of working for an employer to obtain either 180k (if I save) or 450k (if I borrow) I can begin my own business instead.
What is the difference between a small business and a home? My home "employs" people (I just had two roofers earn $4k doing work on my home yesterday), it requires investment and risk...it doesn't generate a cash flow, but 90% of startups don't either.
Lets flip this around...if two people came to Palo Alto in 2009 with a $2 million fund, one doing a starup and the other buying a home...the one doing a startup would have a 90% chance of failure with a 0.1% chance of tripling their money...the other who purchased a home would have had a 99% chance of at least doubling their money, and a 100% chance of making at least a 25% gain. Who is the smart one?
> What is the difference between a small business and a home?
The difference between consumption and investment?
I want a nice shelter, not a 3 bedroom house I don't need or want on the off chance I'll sell at a profit some day. I'm not interested in that.
> Lets flip this around...if two people came to Palo Alto in 2009 with a $2 million fund, one doing a starup and the other buying a home...the one doing a startup would have a 90% chance of failure with a 0.1% chance of tripling their money...the other who purchased a home would have had a 99% chance of at least doubling their money, and a 100% chance of making at least a 25% gain. Who is the smart one?
I could give a similar example of literally any class of assets.
Investing is not arithmetic. These things aren't baked in like Newton's Laws of Thermodynamics. Corelations can look solid for decades and then totally disappear.
I can tell you for free though, that my generation and the ones behind it cannot afford your houses.
Most of the tiny house stuff I've seen seems like absolutely absurd waste of land and at a large scale would introduce worse secondary problems than any suburb today does.
Legitimately, why should I care. It solves a number of problems for me.
I don't live in a city, everybody around me already uses private means to obtain water, sewerage, waste disposal and even power and I'll be doing the same.
Not every solution has to be scalable. In fact the majority are not.
They don't. The money you invest in them doesn't disappear into a Scrooge McDuck cash vault. The seller then spends or invests it.
Also, an asset that servers as collateral for a loan serves to creates the money for the loan.
I agree that homes don't make for great investments for many reasons, but they aren't a drag on the economy.