Bitcoin Myths · #9 of 20
Short Answer
Real estate didn’t become one of the world’s biggest asset classes because houses got better. It happened because money stopped working, and people had nowhere else to put their savings.
The price of shelter isn’t just about shelter
Here’s something worth sitting with: a typical US home cost around $23,000 in 1971. Today it’s over $400,000. That’s roughly 17 times higher. Over the same period, median wages have only risen about 6 times.
If houses were just shelter, prices and wages would track each other. They don’t. Something else is happening inside that price.
That something is savings demand. When money loses value every year (which the US dollar has done consistently since leaving the gold standard in 1971), people need somewhere to park their wealth. Cash steadily loses purchasing power. Bonds often struggle to keep pace with inflation. Stocks can do it, but the volatility is real and most people can’t hold through the swings. So savings flow into real estate. Not just to live in, but to store value. That savings demand stacks on top of the shelter price and pushes the whole thing up.
Economists call this the monetary premium: the portion of an asset’s price driven by people using it as a savings vehicle rather than for its actual function. Put simply: a house used to be mostly shelter. Now it also acts like a savings account.
The gap in that chart is the monetary premium
If homes were priced purely on shelter value, they’d track wages. People buy homes with income, so prices would be tethered to what people can earn. But they’re not. They’re roughly three times higher relative to wages than they were in 1971.
That gap is savings demand. People buying property not just to live in, but to hold value. And they’re right to. Because the alternative (holding dollars) loses value every year by design.
This isn’t a flaw in real estate. Real estate is doing exactly what it should. The problem is that it was never really built for the savings job. It comes with property taxes, maintenance, insurance, illiquidity, and leverage risk. It’s a workaround for a broken money system.
Global real estate is worth roughly $330 trillion: about half of all measurable global wealth. Even a small shift away from real estate as a savings vehicle would represent an enormous transfer of monetary premium. Bitcoin’s total supply is capped at 21 million coins.
Bitcoin was designed for exactly this job
In 1971, the US ended the dollar’s convertibility to gold. Money became something governments could create at will. That period accelerated a shift that was already underway: savings flowing into hard assets like real estate not because those assets got better, but because money got less reliable.
Bitcoin was designed 38 years later with that exact problem in mind. Fixed supply. No authority that can create more. No maintenance costs. No geography. Transferable in minutes anywhere on earth for a fee that doesn’t care about the size of the transaction.
It doesn’t replace the shelter function of real estate. If you need a home, you need a home. But it does directly compete with the monetary premium. That’s the part of real estate’s price driven by savings demand, not shelter demand.
Real estate is doing exactly what it should. The problem is it was never built for this job.
Common questions
Why have home prices gone up so much faster than wages?
Part of the answer is supply and zoning. But a large part is that money has lost purchasing power steadily since 1971, when the US ended the gold standard. People park savings in houses because their dollars don’t hold value on their own. That savings demand, layered on top of shelter demand, pushes prices higher than wages and rents can explain.
What is a monetary premium in real estate?
A monetary premium is the portion of an asset’s price driven by savings demand rather than its practical use. When people buy property partly to protect wealth from inflation, they’re paying for a store-of-value function on top of the shelter function. That extra demand is what’s pushed home prices well beyond what wages alone can explain.
Is Bitcoin actually a better store of value than real estate?
Bitcoin was purpose-built for one job: holding value over time without counterparty risk, maintenance costs, or geographic limits. Real estate does that job only partially. It also requires taxes, insurance, upkeep, and carries debt and liquidity risk. Whether Bitcoin is “better” depends on what you need. The full argument is in the Myth #9 article linked below.
Want to go deeper?
This post is the quick version. The full article walks through the data behind real estate’s monetary premium, how leverage and carry costs compare to Bitcoin, what “store of value” actually means, and why the two assets are competing for the same job, whether or not most buyers realize it.
Read the full analysis: Real Estate Is a Better Store of Value Than Bitcoin | Bitcoin Myths #9
Everything on this site is for educational purposes only. It is not financial, investment, tax, or legal advice. Bitcoin carries real risk. Prices move. Do your own research, think for yourself, and speak with a qualified professional before acting on anything you read here.