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Are you really 5% richer, if realizing that appreciation means selling the house, and buying a comparable one on the market that has also appreciated 5% in valu
by 88913527 5y ago
Are you really 5% richer, if realizing that appreciation means selling the house, and buying a comparable one on the market that has also appreciated 5% in value? Plus, depending on your locality, your property taxes went up due to the new valuation. The only way you're unlocking that value is if you sell the appreciated asset for some good/service that hasn't gone up in value, say, televisions. Otherwise, you're just trading it for other expensive goods and your purchasing power hasn't changed.
- lkrubner 5y agoThose are all valid concerns, but unrelated to the conceptual issue of whether an increase in the nominal price of an asset can be coherently understood to be a form of "inflation."
- shagmin 5y agoI'd argue even if absolutely all housing went up 5% in value, everyone is still at least a little richer (albeit not effectively 5% richer and mostly on paper still). Most people buy a house with a down payment. A conventional down payment is 20%. If you bought a house for $100,000 (with $20k down) and it's now worth $105,000. You can now sell the house, and put $25k down on another house, which means you can now qualify for a $125,000 house. For simplicity I'm ignoring principal that had been paid down on the first mortgage and transactional costs.