The Rate of Return on Everything, 1870–2015 (2019)

Housing as an Investment (Returns, Costs, and Tax Treatment)

• Many commenters read the paper as confirming that housing has historically matched or beaten equities in real total returns, especially when rents/imputed rents are included.
• Others stress that most casual comparisons ignore full ownership costs: interest, maintenance, renovations, property taxes, and time/effort (“trips to Home Depot”).
• Tax treatment matters: depreciation, 1031 exchanges, mortgage-interest deductibility, and capital-gains exclusions (or absence of tax on primary residences in some countries) all boost effective returns.
• Some argue housing’s strong returns are partly policy-driven (retirement via home equity, political protection of homeowners, zoning constraints).

Population Dynamics and Future Housing Returns

• One camp: global population is still growing (even at a slower rate), so housing demand and land scarcity will keep returns strong for our lifetimes.
• Another camp: fertility rates have fallen almost everywhere; global child counts may already have peaked; population could peak around mid–late 21st century, potentially undermining housing growth.
• Debate remains whether shrinking populations will actually lower prices, given preferences for more space, inheritance dynamics, and rental income.

Housing Costs, Affordability, and “Desirable Land”

• Several posts question how housing can outpace incomes indefinitely, noting a hard ceiling at 100% of household income.
• Responses:
  • Housing quality and size have increased (more space, amenities, codes), so part of the “price increase” is quality.
  • Desirable land (central, coastal, well-serviced) is limited, even if total land is not.
  • Elastic demand: people adjust via roommates, living with parents, smaller units, or moving to less desirable areas.
• Some argue real house prices are usually stable long term, with gains concentrated in bubbles and rents, not prices themselves.

Urban Density, Suburbs, and Zoning

• One view: “density death spiral” — high prices in dense cities drive more density, which further increases land values.
• Counterpoint: construction cost per unit can be lower in dense buildings, but land cost and demand keep total prices high.
• Multiple comments point to zoning and land-use restrictions as key drivers of housing returns and inequality; relaxing zoning is proposed as a major lever, though there’s disagreement on whether any city has truly “built its way out” of high prices.

r vs g, Inequality, and Piketty

• The paper’s finding that returns on capital (especially housing) exceed economic growth is linked to rising inequality and political power of asset owners.
• Some note critiques: if housing is stripped out, capital returns may be closer to or below growth, implying housing policy/zoning is central to the r > g story.