And, goldstate's right....a home is not a consumable. They do go nowhere but up over time. It's the over "how much" time that gets folks into trouble.
Housing as an asset has two components: the land and the structures on it.
If you rent the property out, then the whole package meets the conditions of an investment. But if you are living there, then it is generating negative cash flow and you are simply consuming the house over time. The land is the “investment” part of the property, the house is just something you are consuming, albeit slowly.
Since the life of the (constantly maintained) structure is usually much greater than the occupancy period of the owner, the owner does not see him- or herself as consuming the property, but this is what is happening. Eventually the structure will reach the end of its life (maybe 200-300 years for older houses, 70-80 years for the houses that get built now). The land will retain value nonetheless.
Detroit. Certains part of Philadelphia. Camden, NJ.
The house is consumable. You disagree ? Try living in it without maintenance and see how long it lasts. Same as a car - it’s just one crash away from being junk. They are only “assets” on the day they are sold.
The land is the only real asset.
That is not universally true. I have seen home prices plummet in a number of areas long before this latest bubble thing. Talk to people stuck in some very nice houses in Rust Belt towns and ask them what happened to prices when the local mill shut down. Talk to middle income people in older neighborhoods who watched prices drop after Uncle Sugar started passing out Section 8 vouchers in their communities.
For the average American, buying more house than you can either afford or actually need because of the 'investment potential' is foolish. It's a Ponzi scheme that may reward some (mostly builders and real estate agents) but for the most part is a lousy investment when you factor in interest payments, property taxes and upkeep. Aside from professional real estate managers, most any other investment will give a better return.