About fifteen years ago I started travelling around various local church sales, buying silver--mostly jewellry, but also spoons, candlesticks, cutlery, whatever could be found. At the time, the stuff was dirt cheap, and there was no competition. That all changed in the following years, and it has been a few years since I last went looking for the stuff.
An acquaintance of mine pointed out that that was the traditional way to accumulate wealth--the young take advantage of the old, buying the things they no longer wanted. It sounds distasteful, but there is a kind of logic to it.
The classic, of course, was property. The archetypical scenario, with the young fellow cajoling the elderly pensioner to sell his house. "Come on, grandpa. You don't really want to keep going to the trouble of maintaining this place, do you? I'll give you a good price for it."
In older times, I don't think we thought of our homes as having value--other than the value of a place to live. With this mindset, the value of a house changes constantly throughout your life--having greater value when you are young, as its value becomes the net present value of all your future years living in it minus the costs of maintaining it. As you age, that value declines. So if the owner is elderly, we have a situation where the value of the house is much higher to the (presumably young) interested buyer than it does to the seller.
That discrepancy in value creates the opportunity for a really good deal for both sides. The pensioner can receive a sum of money much greater than the house is worth to him, while the buyer pays less than his perception of the house's value.
Since the fall in interest rates that began in 1980, house prices rose so much, creating a "wealth effect" that enriched the majority of homeowners, and changed their perception of the value of a house. Now the value of a house is "objectively" determined by other sales in the area--and not by an individual's life circumstances. It's no longer a purely personal decision either--a homeowner's choice to sell at a lower price will affect the prices of other houses in the neighbourhood, and would be looked upon as a betrayal by the seller's former neighbours.
The new perception of a house as objectively definable wealth now seems to be ubiquitous, but is a recent state of the human condition. The old dynamic, a form of inter-generational wealth transfer, has disappeared in the depersonalization of financial affairs.
An acquaintance of mine pointed out that that was the traditional way to accumulate wealth--the young take advantage of the old, buying the things they no longer wanted. It sounds distasteful, but there is a kind of logic to it.
The classic, of course, was property. The archetypical scenario, with the young fellow cajoling the elderly pensioner to sell his house. "Come on, grandpa. You don't really want to keep going to the trouble of maintaining this place, do you? I'll give you a good price for it."
In older times, I don't think we thought of our homes as having value--other than the value of a place to live. With this mindset, the value of a house changes constantly throughout your life--having greater value when you are young, as its value becomes the net present value of all your future years living in it minus the costs of maintaining it. As you age, that value declines. So if the owner is elderly, we have a situation where the value of the house is much higher to the (presumably young) interested buyer than it does to the seller.
That discrepancy in value creates the opportunity for a really good deal for both sides. The pensioner can receive a sum of money much greater than the house is worth to him, while the buyer pays less than his perception of the house's value.
Since the fall in interest rates that began in 1980, house prices rose so much, creating a "wealth effect" that enriched the majority of homeowners, and changed their perception of the value of a house. Now the value of a house is "objectively" determined by other sales in the area--and not by an individual's life circumstances. It's no longer a purely personal decision either--a homeowner's choice to sell at a lower price will affect the prices of other houses in the neighbourhood, and would be looked upon as a betrayal by the seller's former neighbours.
The new perception of a house as objectively definable wealth now seems to be ubiquitous, but is a recent state of the human condition. The old dynamic, a form of inter-generational wealth transfer, has disappeared in the depersonalization of financial affairs.
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