5 ms·

I don't really get this mentality. Yes, its good to have your home go up in value, but when you sell, are you moving to South Dakota? If not, then the houses yo

I don't really get this mentality. Yes, its good to have your home go up in value, but when you sell, are you moving to South Dakota? If not, then the houses your hoping to move into have ALSO gone up in value. The difference being that nobody can afford 'starter homes' at the low end, so people have a harder time selling them, and moving up to a nicer house.

eweise 9y ago
A lot of people view their home as part of their retirement plan. Buy house, raise kids, retire and sell house. Buy new house outside of work center. House prices in places like Redding CA are in the 200K range. Same house in the bay area is around 1million.
- adrianmonk 9y ago
  What advantage does that offer compared to just having cheaper housing and putting the difference in other investments? To me it certainly seems worse than other retirement approaches. You are forced into making a single asset a huge percentage of your net worth, which utterly destroys your diversification. Real estate is also notoriously illiquid, so if something forces you out of the area, you could take an enormous loss. If someone proposed another retirement investment strategy with these characteristics that didn't involve your home, people would say, "I'll pass... that sounds like a really bad deal."
  - toomuchtodo 9y ago
    Other investments aren't as reliable and secure as real estate.
davidw 9y ago
In the Bay Area, they sell and move to Oregon, driving up our prices. And because they're retired, don't have kids in schools or anything, they mostly vote against taxes. There are also plenty of entrepreneurs and hackers and so on who move up here, so that balances things out to some degree. Still, though, California's NIMBYism has repercussions throughout the entire west coast.
- deleted 9y ago
  [deleted]
- dsfyu404ed 9y ago
  I call that social pollution. It's no different than a resource boom decimating a landscape then moving on and leaving the place in a really bad situation. It's almost as though people don't realize that lots of small things (like local zoning for example) add up to all the big differences that made the place so attractive that they moved there. Specifically with regards to a bunch of retirees moving in, I'd take that over young couples any day of the week. People raising family will have much more impact than people who just want to enjoy retirement.
dragonwriter 9y ago
> Yes, its good to have your home go up in value, but when you sell, are you moving to South Dakota? Yes, lots of people plan to sell and move to a less expensive locale in retirement. Often, people who came to expensive places for good jobs but not because they had any particular desire to live in that place plan to return to where they came from in retirement. I've known lots of people from the Midwest working in CA where this is their plan.
theptip 9y ago
I think the calculations here can get a bit complex, and you don't often see the full argument made. Let's say you buy a house at price 100, and the market doubles bringing the price up to 200. If you then sell and move into a house that was 120 and is now 240, then you've got to find 40 extra for the upgrade instead of the 20 extra you would have paid absent the price change. That might hurt in the short-term, but in absolute terms your asset is worth a lot more, so you're winning. And depending on how much of your mortgage is paid off, you could be ahead in the short-term too; if you have paid down 25, when you sell you get 50 back to put into your new mortgage, and that more than covers the increase in cost of the upgrade (you got 25 profit from the market movement, and had to pay 20 extra for your upgrade, so you're up 5). Not to mention that if you don't decide to move house, the nest egg that you're leaving to your kids (or sitting on until you downsize later in life) just doubled in value. As you can probably see it would be easy to construct a set of parameters where the short-term price change hurts you (e.g. you're moving before paying down much of your principal), but property owners tend to be optimizing for the long-term gains.

eweise 9y ago

A lot of people view their home as part of their retirement plan. Buy house, raise kids, retire and sell house. Buy new house outside of work center. House prices in places like Redding CA are in the 200K range. Same house in the bay area is around 1million.

adrianmonk 9y ago
What advantage does that offer compared to just having cheaper housing and putting the difference in other investments? To me it certainly seems worse than other retirement approaches. You are forced into making a single asset a huge percentage of your net worth, which utterly destroys your diversification. Real estate is also notoriously illiquid, so if something forces you out of the area, you could take an enormous loss. If someone proposed another retirement investment strategy with these characteristics that didn't involve your home, people would say, "I'll pass... that sounds like a really bad deal."
- toomuchtodo 9y ago
  Other investments aren't as reliable and secure as real estate.

davidw 9y ago

In the Bay Area, they sell and move to Oregon, driving up our prices. And because they're retired, don't have kids in schools or anything, they mostly vote against taxes. There are also plenty of entrepreneurs and hackers and so on who move up here, so that balances things out to some degree. Still, though, California's NIMBYism has repercussions throughout the entire west coast.

deleted 9y ago
[deleted]
dsfyu404ed 9y ago
I call that social pollution. It's no different than a resource boom decimating a landscape then moving on and leaving the place in a really bad situation. It's almost as though people don't realize that lots of small things (like local zoning for example) add up to all the big differences that made the place so attractive that they moved there. Specifically with regards to a bunch of retirees moving in, I'd take that over young couples any day of the week. People raising family will have much more impact than people who just want to enjoy retirement.

dragonwriter 9y ago

> Yes, its good to have your home go up in value, but when you sell, are you moving to South Dakota? Yes, lots of people plan to sell and move to a less expensive locale in retirement. Often, people who came to expensive places for good jobs but not because they had any particular desire to live in that place plan to return to where they came from in retirement. I've known lots of people from the Midwest working in CA where this is their plan.

theptip 9y ago

I think the calculations here can get a bit complex, and you don't often see the full argument made. Let's say you buy a house at price 100, and the market doubles bringing the price up to 200. If you then sell and move into a house that was 120 and is now 240, then you've got to find 40 extra for the upgrade instead of the 20 extra you would have paid absent the price change. That might hurt in the short-term, but in absolute terms your asset is worth a lot more, so you're winning. And depending on how much of your mortgage is paid off, you could be ahead in the short-term too; if you have paid down 25, when you sell you get 50 back to put into your new mortgage, and that more than covers the increase in cost of the upgrade (you got 25 profit from the market movement, and had to pay 20 extra for your upgrade, so you're up 5). Not to mention that if you don't decide to move house, the nest egg that you're leaving to your kids (or sitting on until you downsize later in life) just doubled in value. As you can probably see it would be easy to construct a set of parameters where the short-term price change hurts you (e.g. you're moving before paying down much of your principal), but property owners tend to be optimizing for the long-term gains.