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For someone for whom the biggest component of that wealth is the current valuation of the home in which they live, the fluctuations of that price affects only t
by PeterisP 5y ago
For someone for whom the biggest component of that wealth is the current valuation of the home in which they live, the fluctuations of that price affects only the theoretical number, but does not affect their life in any meaningful way; they own and use the exact same asset as before, they are not trading it.
These price fluctuations matter for people who either want to invest into real estate or withdraw previous investment, not for people who want to live in their current house.
- djyaz1200 5y agoThat's true except for cash out refinancing. Lots of middle class folks take out home equity loans to pay down credit card debt. This was a big component of the 2008 financial crisis. That and banks leveraging 40-1 and betting big that housing would never decrease in value.
- rootusrootus 5y ago> take out home equity loans to pay down credit card debt I'm sure I'm preaching to the choir, but this is a terrible strategy. In a perfect world it cuts the interest payment a lot, but the risks are significant.
- sokoloff 5y agoThe risk is magnified if you’re the type of person with a track record of running up credit card debt.