Here are some questions to get us thinking: What makes a home or community valuable? What makes one home worth so much more than another, even if it’s the same size and quality?
Most people would answer: location. They would be right, the three word mantra of real-estate professionals everywhere is: location, location, location.
So what is it about a location that makes a property more valuable? If you could sum it up in one sentence, it’s a location with great schools (primarily) and fast, secure access to the global economic system (work and stores).
These factors are indicators of future demand, which would make it easier to sell when it comes time to move.
However, what happens when the global economy is depressed or suffers from financial shocks? Values plummet as we recently saw in the US, with over one in every five mortgages currently under water (worth less than the loan it took to buy it).
They plummet because homes are valued as derivative assets. They derive their value from their connectivity to global economy. They don’t have any intrinsic value.
So, if the global system continues to deteriorate as nearly every long term indicator says it will, we can expect nothing but bad news in home values for some time to come. Traditional wealth accumulation in reverse.
Fortunately, there may be a way out of this trap. A way that makes our homes and communities increasingly valuable the tougher the situation gets economically.
It starts with the realization that over the vast majority of our history as civilized beings, our homes and our communities derived their value from how much food and energy they could produce.
That changed only recently (by historical standards) as we became increasingly dependent on the global economic system. Due to this dependence, our homes became hollow decorative assets, devoid of any productive capacity. Our communities became black holes of consumption.
The way out of the trap of sinking valuations is to make our homes and communities productive assets again. An asset that can produce food, energy, water, and products. An asset that feeds us, warms us, and provides for us. An asset that can, in a pinch, generate us income.
A home like that has intrinsic value. It has value regardless of what happens in the region, the nation, or the world. In fact, a home or community that is locally productive actually GAINS (mightily) in value as the global financial system tanks, sputters, and goes into cardiac arrest.
This may not be a merely a cyclical downturn we are suffering. It may actually be the start of an arduous and tumultuous era of transition from the global, bureaucratic industrial economy of the 20th Century to the local, networked resilient economy of the late 21st Century. If that is true, getting resilient early is going to save you lots and lots of personal tragedy.
A big challenge of our online community is to find ways to do add this productivity to our homes and communities in economically advantageous ways.
Stay tuned for more and more research of how to make your home a productive asset to your own economy.
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