I’m writing this to kickstart my own thinking on the topic, not because I’ve reached any conclusions.
Home improvement currently serves a horrible mishmash of conflated concerns. Probably the most important for our economy is personal investment in a “nest egg”–a topic Dave Ramsey and Robert Kiyosaki would fight over, which already signifies trouble at the level of basic definitions. There’s also personal comfort and aesthetics, as well as improving the house in a way that’ll be attractive to potential buyers, another source of tension if people are different (they are). There are also investments to preserve or upgrade the basic functions of a house, like buying a new roof. Last, there’s all the weird economic activity that financialization tends to produce, like 30% of houses in my county being reserved for Airbnb rentals.
Because our economic system is about to go through some fundamental changes, the conventional confusion of these purposes should, theoretically, open up unusual opportunities to make money during the transition period as they decouple. That is, the efficient market hypothesis will not be true in housing for about 10-20 years, as a ballpark guess. Market fundamentalists will screech at the idea, but I’m not just talking about economics here, I’m talking about one of those periods in history when the market plays a supporting role to the accumulated consequences of human insanity: crisis and its aftereffects.
We don’t know what the crisis will look like exactly, but we know there will be a financial component for at least two reasons, Peter Turchin’s “wealth pump” and the military-enforced trade deficit. Our prosperity depends heavily on imports from other countries, with our primary export being military supremacy. Why would those countries, especially China, accept such a bad deal? Partly because they had to as a form of tribute, partly because we were a great customer and selling to us fueled their economic rise, partly because they were taking advantage of our CEOs’ high time preference to undercut our productive capacity, partly because they were undermining our military supremacy with electronic backdoors, and probably other reasons I can’t think of off the top of my head.
As our military supremacy visibly declines (and therefore also our economic supremacy), we’d expect the imports related to it to slow down, disappear, or possibly even reverse direction. Who knows, maybe in the future I’ll have a side gig setting up fly-by-night sellers on Chinese Amazon sending white-labeled trash to housewives in Shenzhen. Anyway, what I’m getting at is the massive trade deficit, which represents about half of our prosperity, is unlikely to survive the various wars after we lose in Iran.
Here are some possible big picture scenarios:
- Gently managed Britain-style imperial collapse. Unlikely due to elite demographics (ref. Turchin).
- Everything’s great, economy keeps improving 4% every year like always. Demographic decline toward India conditions.
- Stagnation but slow, like in recent entertainment. There’s still internet and stuff to watch on it if you’re not picky.
- Sharp 10-year depression and recovery, like postwar Germany.
- Argentina-style financial collapse. Most likely, in wake of Israeli empire collapse and SWIFT alternative in BRICS.
- Covid-style long-term logistics systems breakdown. Would be very bad.
- Roman collapse-style Reconquista from the south.
Returning to house values, we should consider which parts of a house’s value are going to be decoupled from the others in the wake of the most likely futures, and in what direction. We should also consider the Silver Wave circa 2040. For reference, I’m going to copypasta some Chat GPT text that I made for managing our household maintenance expenses.
Heuristics for spending the house maintenance budget.
***Layer 1 — Catastrophic Risk Prevention (non-negotiable)
These are failures that create irreversible or compounding damage:
- Roof leaks, water intrusion
- Foundation issues
- Electrical hazards (fire risk)
- Plumbing failures (burst pipes, sewage)
- Mold conditions
- Central heating failure
If ignoring it could cause ≥5× cost within 1–3 years, it belongs here.
***Layer 2 — Hidden System Integrity
Systems that quietly degrade and then fail expensively:
- HVAC servicing, filters
- Water heater aging
- Drainage and grading
- Insulation and ventilation
- Appliance maintenance (not replacement)
These are easy to ignore because nothing is “wrong yet.”
***Layer 3 — Efficiency and Cost Reduction
These improve your long-term resource position:
- Air sealing, insulation upgrades
- Energy-efficient appliances (when replacement is already needed)
- Water efficiency improvements
Key distinction: Do not upgrade purely for efficiency unless payback is real and near-term. This layer is about compounding savings, not ideology.
***Layer 4 — Functional Friction Reduction
Things that waste time, attention, or create low-grade irritation:
- Poor storage / organization
- Broken fixtures (doors, drawers, lighting)
- Layout inefficiencies
This layer is undervalued but high leverage for quality of life. These rarely look urgent, but they degrade daily experience, increase cognitive load, and subtly reduce discipline.
***Layer 5 — Aesthetic and Identity Alignment
Paint, decor, landscaping, stylistic upgrades. These matter—but only after the house is stable, systems are reliable, and friction is low. Otherwise, they become a form of avoidance or signaling.
***Budgeting Heuristic (Simple but Robust)
Allocate roughly:
50–70% → Layers 1–2 (risk + systems)
10–25% → Layer 3 (efficiency, when justified)
10–20% → Layer 4 (friction reduction)
0–15% → Layer 5 (aesthetic)
We can usefully talk about layers 1 and 2 as the “true” value of a home, in the sense that these are what people care about in a chaotic situation (like war, economic crisis, etc.). During Covid, we saw a massive spike in spending on layer 5, which represents stress-fueled personal expression masquerading as “investment”. That will probably happen again. Layer 4 is more of a personal productivity thing, and only has downstream effects on the economy, so we can dismiss it. I’ll have to stew on layer 3, because it’s a complex soup of top-down policy, ideology, investment, code, prepper fantasies, door-to-door sales, and technical innovation. Are people going to be buying more solar panels during a crisis?
My gut says no, but my gut also says the opposite of what a normal person’s does in most situations. I’m still shocked, to this day, that blogging platforms with arbitrary character limits and video platforms with arbitrary time limits remain wildly influential. What’s next, credit cards with tiny spending limits? Texting plans with character limits? Video game platforms where all the games have 20-second time limits? Actually shoot, that one would probably blow up, maybe I’ll do that instead of trying to understand a dying financial instrument.
