3 ms·

what does it matter, you buy a house for $500k and sell it for $900k a couple years later, same difference?

pcthrowaway 5y ago
Yes, or if you bought it for 40K but it burns down when valued at 800K, that loss is still effectively an 800K loss to you. Replacing it will cost the same.
- dvt 5y ago
  This is not how things work at all. The wood and plaster and glass your house is made of doesn't go up in value, your land (aka deed) does. So if your house burns down, you did not, in fact, lose $800k.
  - shiohime 5y ago
    The materials already used in your house may not go up in value, but the value of the raw materials themselves certainly have gone up in value due to 30% inflation or whatever over the past year. Take a look at lumber prices. In this example I'm sure it wouldn't cost $800k to rebuild the house, but it'd certainly be more than $40k, so it would definitely be a loss.
- meheleventyone 5y ago
  The cost to rebuild is often less than the cost of the house to buy these days.
- jacquesm 5y ago
  Normally speaking people would have their houses insured against fires.
arthur_sav 5y ago
A loss is a loss but it matters in terms of exposure for the individual. If they took a loan or put all of their life savings into it then it feels a bit different than turning $50 into $500000.
encoderer 5y ago
Sounds like the difference is about $499,998
mosselman 5y ago
It matters for context: Lets say I bought a lottery ticket for $10 and my ticket wins and I can go pick up $200 million. On my way to the office of the lottery place I lose the ticket somehow, then I am not out $200 million, I just don't have it anymore, but it isn't as if suddenly I can't lead the same life as before I bought the ticket. Lets now say that I just bought a huge number of toys for all of my life savings to sell in the holidays and then the uninsured warehouse where I stored them burned down, I actually lose all of my life savings and I have to sell the house, my car, lose the kids, etc. I am not saying it doesn't suck, I am just trying to discover the context.

Yes, or if you bought it for 40K but it burns down when valued at 800K, that loss is still effectively an 800K loss to you. Replacing it will cost the same.

dvt 5y ago
This is not how things work at all. The wood and plaster and glass your house is made of doesn't go up in value, your land (aka deed) does. So if your house burns down, you did not, in fact, lose $800k.
- shiohime 5y ago
  The materials already used in your house may not go up in value, but the value of the raw materials themselves certainly have gone up in value due to 30% inflation or whatever over the past year. Take a look at lumber prices. In this example I'm sure it wouldn't cost $800k to rebuild the house, but it'd certainly be more than $40k, so it would definitely be a loss.
meheleventyone 5y ago
The cost to rebuild is often less than the cost of the house to buy these days.
jacquesm 5y ago
Normally speaking people would have their houses insured against fires.

arthur_sav 5y ago

A loss is a loss but it matters in terms of exposure for the individual. If they took a loan or put all of their life savings into it then it feels a bit different than turning $50 into $500000.

encoderer 5y ago

Sounds like the difference is about $499,998

mosselman 5y ago

It matters for context: Lets say I bought a lottery ticket for $10 and my ticket wins and I can go pick up $200 million. On my way to the office of the lottery place I lose the ticket somehow, then I am not out $200 million, I just don't have it anymore, but it isn't as if suddenly I can't lead the same life as before I bought the ticket. Lets now say that I just bought a huge number of toys for all of my life savings to sell in the holidays and then the uninsured warehouse where I stored them burned down, I actually lose all of my life savings and I have to sell the house, my car, lose the kids, etc. I am not saying it doesn't suck, I am just trying to discover the context.