There's a couple of issues I want to address right now, but it just seems like a good day to deal with this one head on. Increasingly, people a lot younger than myself are beginning to question the rationale for today's housing structures, in investment based terms.
"Big houses" for (practically) everyone were essentially a twentieth century product, in the U.S. In the post war years, changes in finance and housing formation, vastly contributed to government growth. For the most part, these changes remained reasonable, so long as incomes could readily be associated with jobs in many regions in the country. However, as people increasingly need to rely on their own wits for finding gainful employment, they are forced to look anew at the way primary investments actually take place.
Okay, I'm already getting "wordy" in this post, hence will cut to the chase. Housing is a lousy investment, because it does not provide the productive income people often need, when they do not have sufficient work options. Yes, housing investment means one does not have to pay rent, and one can even live rent free if a house is owned outright. Great...right? Not if property taxes are coming due, food still needs to be put on the table, and there is no nearby work.
As a result: if finding employment is difficult in a given area, and people don't have ready means to arbitrage their time, they need to arbitrage home value, somehow. No, not for purposes of yet another ridiculous loan, but for income. Unfortunately, they are discouraged in this effort at the level of family, legal structures and municipal structures. How so?
Family may not want another family member living in the family home, to take on a roommate who could provide income. Or, in a divorce settlement a judge may rule that the person remaining in a house cannot gain income from said roommate possibility, should one's spouse move away and leave the remaining partner in a bind. Last but certainly not least, the city may not appreciate the fact that musicians would like to utilize a couple of rooms in their home as a recording studio. In spite of what people imagine about the lack of zoning in Houston, I encountered this situation in the seventies, and discovered most newer housing in Houston prohibited these kinds of business options.
It's easy to imagine that individuals are "sitting pretty" if they live in a house that is paid off. Not so fast. Whether the house was paid for in cash or a thirty year commitment was involved, that house still isn't generating an income stream. This is particularly an issue, if someone's education or ability also isn't generating an income stream in a given area. True, the lack of housing income stream may not be problematic if a person has retirement income or lives where nearby jobs are available. But what if these options aren't present? That essentially means someone needs to move where the jobs are.
Sell the house, so as to have a cushion for moving expenses and what may be a long job search? Not so fast. Chances are the house is owned by more than one family member (in some states, even if divorced from that family member) and the house cannot be sold. So the last remaining person (of an earlier existing household) who moves away from a collectively owned home, forfeits his or her rights to the house, and yet that is the only way to personal freedom. Not every person is healthy enough or strong enough to give up those house rights. The remaining option? Everyone waits for someone to die, so the house can finally get some TLC by someone who is free to personally take care of the deteriorating structure, without loss of resources to other family members.
Many baby boomers don't relate to house investments quite the way I do, which is probably a darn good thing. These are difficult aspects of life which really deserve to remain hidden, were it not for the problems they now impose on societies in general. Some know all too well the issues at stake. Yet there is almost no gain from speaking up, and in many instances it means further social isolation, to do so. Sometimes people simply react to these impossible circumstance and end up in prison. Fortunately, those younger than myself are starting to figure these things out and with a little luck, changes will be on the way. It is particularly insane to expect someone to hold a thirty year investment which does not support them back in any tangible way other than a place to lay one's head. If anyone ever wondered why I use the term flexible building components waaaaay too often, now they know why.
I would personally like to see local investment options which - after a ten year ongoing commitment - actually provide a time cushion for anyone who needs to engage in productive activity which is not presently compensated on its own merits. Just think if these local investment programs were begun at an early age, to provide savings for children who are monetarily compensated for assisting peers in ongoing educational activities. One could experience their first moments of investment provided freedom, just as they are entering their adulthood years. Hopefully, better investment opportunities will become a part of the near future.