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0 pointschiefalchemist3y ago0 comments

> If my house goes up in value it gives me an asset I can sell when I need to buy a different home (a benefit a renter doesn't have). It can even mean I sell my expensive home here and retire somewhere cheap.

Yes. But for the most part prices are relative. Your house increases. So does the move to house.

Higher price...insurace is more costly. Property tax...more costly. More capital gains (from a sale)...more CG taxes to pay.

You're generally correct. What you didn't factor in is all these things are relative. About the only way to win is to buy when mortgage rates are high (and closing prices lower) and then refi later. This will more or less cheat the relativeness of home prices.

Using cheap money to drive up price is a false god. It's a pyramid scheme. It's a - pardon the pun - house of cards. And now we're about to learn this. Sadly, again.

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CalRobert3y ago

I'm on the same page but that was kind of my point. Say I buy a house in 2010 for 100k. In 2022 my house is worth 300k. Now say I want to move to a similar house next door that went through similar price changes. It likely went through the same appreciation. It's a lot easier for me to buy that house when I've got the equity in my own then if I'd been renting the whole time.

And to the prop tax and cap gains notes - we distort things by giving people carveouts for property tax (note Prop 13 in California) and not charging capital gains taxes on houses, at least below a certain limit (250/500 single/married in the US, for instance)

chiefalchemistOP3y ago

Buying v renting. That's a different discussion.

But now that you brought it up...renters might not have equity but have you balanced equity against taxes, time and cost of maintenance, etc.*

Again, these are costs too often not considered. Too many people falsely quote their closing prices as what they paid for their home. Nah. That's the total cost of mortgage + taxes + insurance + time & cost of maintenance, etc. That's the full understanding of the costs.

* of course there are community and family reasons for owning. But that stability can be an anchor. WFH is changing that for knowledge workers. But what if you can't WFH and your type of work is not growing in your area. With ownership you can't pickup and move.

The topic has nuance and can be complicated. It's not the simple model banking and real estate sell, that much is true.

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