Wealth effect ? Sigh… More and more debt.
A dwelling-house, as such, contributes nothing to the revenue of its inhabitants". - Adam Smith - The Wealth of Nations
How does Mr. Smith reach that conclusion? Most of the nation’s millionaires are that wealthy because they purchased houses 20+ years ago and they can sell them for over $1 Million now.
That said, the house I live in is not making me rich. If my landlord has a mortgage on it, my rent more than covers the repayments on it. If he bought it outright, then the rent I pay him is pure gravy. It’s contributing something to his revenue.
It’s not pure gravy. There’s an opportunity cost in having that money tied up in a house. Plus there are other obligations on a landlord beyond mortgage payments.
