How much is an automobile “worth?”
How much is a house “worth?”
Obviously, the short answer is: “what ever someone is willing to pay.” But, is this really true? Is anything ever worth anything?
Back to the question of what a car is worth. It can be argued that it depends on what kind of car we are talking about. While that may be true, generally speaking, there is some loss of “value” as soon as you drive the car off the lot—-and certainly after you have made payments on it for a year.
It would seem, things only have “worth” relative to what we “say” they are worth. We live our lives depending on value being maintained by “faith”—-by “agreement.” Things are worth what we can agree they are worth. Clearly there are things that are “worth” more than we are willing to pay, just as there are things that are “worth” less than we are willing to pay.
Is it not all a matter of perception?
Take the current economic crisis, that has followed a period of time in which many, many people were willing to buy homes that were valued at “XYZ” and now they are no longer worth that much. Now some people are talking about loss of value—-and even about being “compensated” for that loss of value. The reality is that the homes were never worth what we thought they were worth in the first place, so where is the loss of value—-except on paper? Isn’t it just like gambling?—-we put our money in the slot, pull the handle and hope for the best? We make up nice theories about how some things that we value are supposed to be less “vulnerable” to being a bad gamble than others, but the harsh reality is that everything goes back to zero sooner or later—-we just hope (gamble) that it won’t be on our watch—or our kid’s watch.
Anything we can not take with us when we die is a gamble.
I know it shows up on spreadsheets and bank accounts as a loss, but where is the loss of “intrinsic value.” Obviously you can not loose what never existed. As long as we place value on things that have no intrinsic value we are bound to be disappointed.
Consider for a moment the following scenario: once upon a time there was: “NO HOUSE.” Mr. and Mrs. Homeowner come along and decide to build: A HOUSE. The house cost them $327,000.00 and it would seem that this cost is: THE VALUE OF THE HOUSE. What is the value of the house in 300 years?
The most logical answer is: NO HOUSE (back to no value again). In the best of scenarios, value is transitory, illusive—-if not a total illusion. Now if the house is lucky enough to escape, fire, tornado, tsunami, earthquakes, termites, extension of the airport or inter-state (or other forms of eminent domain), or was the boyhood home of a president or rock-star—-and is still standing, it might stand a chance of still having some value. In the end—even Jimi Hendrix’s boyhood home bit the dust. What starts out at zero always—-sooner or later—-returns to zero—-no matter what the President does or says. And to prevent this from sounding too grim—-arriving back at zero creates the opportunity for finding new value as the cycle goes on and on.
What are the things in your life that have “intrinsic” value?
Are they enough to get your through the gambles in the rest of your life?
Charles Buell, Real Estate Inspections in Seattle
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