system
Given the following post, respond as if you're commenting on Reddit:
human
Why is wealth building tied to homeownership instead of investing in investment funds and the stock market?

Why is wealth building primarily done by homeownership instead of investing in investment funds and the stock market?

I think that instead of the current model, where homeownership is used as wealth building (and thus in opposition to affordable housing & arguably unsustainable in the long-term), zoning restrictions prioritizing single family housing should be lifted, government incentives for single family homeownership should be removed, and supply should generally be slightly less than or equal to demand, limiting the long-term growth of property values to the inflation rate.

From my understanding, the results would allow renting and housing overall to become much more economical, and would likely help medium- to high-density developments such as condominiums and apartments to grow in popularity.  To compensate for property values no longer growing beyond the inflation rate, people would then be strongly recommended (if not mandated) to invest a certain percentage of their income into investment funds that would serve as the main method of wealth building, which would support public companies and encourage public participation in business and finance. Those who would lose a substantial portion of their property values from these reforms and rely on said values for their retirement would be reasonably compensated by the government since ultimately government policy led to the arguably unsustainable use of homeownership as a vehicle for wealth building.

Would my proposed model be feasible, or are there major flaws that would prevent its success?
gpt
Wealth building is done through homeownership mostly because one can use a home while building wealth in it. It's a fundamentally flawed view of housing to say that it's a vehicle for building wealth before anything else. Look at it like this:


You are going to pay for housing one way or another. If you rent then housing effectively becomes a consumable good. You pay for it, but have to continue paying for as long as you use it. When you own a house you pay it until it's paid off then you own it. It then becomes a store of value for all the money you put into it. In addition to the original cost of the house you also paid interest on the loan which is additional money you would want to sell it for therefore the price when you sell will, by nature, be higher than the tag price you bought it for. So we can see that renting represents a loss to the consumer which they don't incur through buying. 


Another flaw, of course, is that you're viewing the issue as an either/or situation. People can build wealth in their homes *and* in investments. This is precisely what retirement accounts like a 401k or an IRA do. Most financially responsible people save and invest for their retirement on top of building wealth in their home.

An economic model which prioritizes rentals may be good for real estate developers or landlords, but the bulk of the public would lose out if they needed to rent rather than buy.