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This is a good point but leaves HELOCs out of the equation, and also the possibility of downshifting to a cheaper home. Ordinary, one-home-only people treat the

This is a good point but leaves HELOCs out of the equation, and also the possibility of downshifting to a cheaper home. Ordinary, one-home-only people treat their home as an investment because they really can use it that way, though not as easily as a landlord. For one, they can always sell the house and move to a cheaper one -- or the might be able to if their local housing market hasn't been inflating past their means since they bought their house. More directly though, if they have any equity in their house, they can walk into a bank and walk out with a HELOC and they don't have to move anywhere. My house appreciating 100k this year means, potentially, that I get to spend 100k this year.

MontyCarloHall 4y ago
>they can walk into a ba[n]k and walk out with a HELOC. My house appreciating 100k this year means, potentially, that I get to spend 100k this year. No it doesn’t. It means you can take on an additional $100k of debt this year. HELOCs are not free money, no matter how much the banks want to convince you this is the case.
- ElevenLathe 4y ago
  Yes, debt is money I get to spend now. That's why I borrowed it. If I didn't have anything to spend it on, I wouldn't borrow.
  - MontyCarloHall 4y ago
    No, debt is money you get to spend now and pay back later. You haven’t actually net gained any money by taking out that HELOC, unless you manage to wisely invest it with an ROI higher than your interest rate.
    - ElevenLathe 4y ago
      That's the point: I wouldn't gain any money by not taking the loan either. I gained the "money" (wealth, really) by my house appreciating in value. Anyway I'm not advocating that everybody borrow against every shred of equity in their house, just noting that this temptation exists. If my house is worth more suddenly, my spending can increase suddenly, without my even having to move. Whether or not this is wise is a separate discussion.

MontyCarloHall 4y ago

>they can walk into a ba[n]k and walk out with a HELOC. My house appreciating 100k this year means, potentially, that I get to spend 100k this year. No it doesn’t. It means you can take on an additional $100k of debt this year. HELOCs are not free money, no matter how much the banks want to convince you this is the case.

ElevenLathe 4y ago
Yes, debt is money I get to spend now. That's why I borrowed it. If I didn't have anything to spend it on, I wouldn't borrow.
- MontyCarloHall 4y ago
  No, debt is money you get to spend now and pay back later. You haven’t actually net gained any money by taking out that HELOC, unless you manage to wisely invest it with an ROI higher than your interest rate.
  - ElevenLathe 4y ago
    That's the point: I wouldn't gain any money by not taking the loan either. I gained the "money" (wealth, really) by my house appreciating in value. Anyway I'm not advocating that everybody borrow against every shred of equity in their house, just noting that this temptation exists. If my house is worth more suddenly, my spending can increase suddenly, without my even having to move. Whether or not this is wise is a separate discussion.