More people are treating homes like investments, not just housing

In short: Research and market data show homes are increasingly treated as investments and financial assets, not only as places to live.

What's going on

A growing body of research says housing is being treated more like a financial asset, meaning something you buy because it can hold value, rise in price, or help you borrow money. In simple terms, a home is not just shelter, it is also like a savings account you live in.

Long-term price data in the United States points to a clear shift. From about 1890 to 1972, home prices generally fell compared to average income. After around 1972, prices started rising faster than incomes, which fits the idea that buyers expect the home to preserve wealth or produce gains when they sell.

This mindset shows up in household finances. In the US, primary homes make up more than one quarter of all household assets, totaling about $40.9 trillion, based on the 2022 Survey of Consumer Finances. It also shows up in buyer behavior, like homeowners adding rental units or home offices to improve resale value or earn income.

Large investors play a bigger role too. Research in Europe describes pension funds and investment firms buying and renting homes at scale, turning apartments into large portfolios (like buying many copies of the same stock, but the stock is housing). This can add pressure to prices in popular cities.

What to watch

Experts caution that the recent period of rapid, double-digit annual price jumps is unlikely to be the norm going forward. A key question for policymakers is how to balance housing as a way to build wealth with housing as a basic need, especially as prices rise faster than wages in many places.

Source: NYTimes