Secret #12 – Houses are Also an Investment Good
It’s a law of economics that higher prices reduce demand and lower prices increase demand but that’s only for consumption goods.
Houses are partly an investment good for regular live-in home owners, and houses are entirely an investment good for landlord owners.
That’s why house prices can behave a bit like a hot stock in the stock market, when prices go up – and enough people expect them to continue to go up – more people buy, and then prices go up even more in a feedback loop.
Some people buy houses, not despite the higher prices, but because of the higher prices when they expect the price increases to continue.