Houses: a depreciating asset?

142 Cat Rock
142 Cat Rock

This Cos Cob home sold new for $4.050 million in June, 2005. The buyers tried reselling it for $5.450 two years later and now are trying agin, this time at $3.690.

8 Comments

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8 responses to “Houses: a depreciating asset?

  1. Old School Grump

    Nah, not a depreciating asset, just a reminder that sometimes illiquidity really really really matters.

    P.S. What’s with that giant parking lot in front? Makes it look like a restaurant.

  2. anonymous

    Logically, houses should depreciate down to land value

    Who the hell wants to pay same for a used house as an equivalent new house? Same pricing logic as new vs used cars or clothing or underwear….

  3. Stanwich

    Anon, you are wrong. Logic has nothing to do with it. It has to do with supply and demand. Depreciation is a concept best left for accounting wonks, taxation folks and other assets that have a “useable” life span like computers and cars. Real estate is like stocks or bonds, they may increase or decrease in value but they most certainly do not “depreciate”.

  4. neighbor

    Disagree with anonymous. An old house (vintage early 1900’s), well maintained, can be superior in building quality than a new one. Besides, new ones are a dime a dozen and all look the same.

  5. Helsa Poppin

    Hey, some of us actually prefer old houses. The charm, the solid quality of the building materials, the fact that if it hasn’t fallen down in the last 100 years, it is unlikely to do so in the next 10. I don’t know if they built them better back then, or it’s just survivorship bias (i.e., the duds were torn down long ago). Most new houses really turn me off, especially the ones that try for stately and settle for pompous.

  6. InfoDiva

    Sure, Anon 10:50…and the Queen of England demanded a new castle after her coronation. And then, of course, there’s that old joint on Pennsylvania Avenue in DC.

    “Used.”

    Makes me wonder if you have ever in your life set foot in a lovely old house. You need to get out more.

  7. pulled up in OG

    Helsa Poppin – That’s funny, but I think they try for pompous and succeed. (Spots on a leopard and all.)

  8. Anonymous

    But Info Diva, Castles and Stately Homes are constructed of stone not cardboard.
    It’s the land that homes stand on which holds the value and the supply and demand of that land.