6 ms·

I own two properties, both of which I was lucky enough to be able to afford before the housing crises. Even though I could sell and get a lot more than I paid f

I own two properties, both of which I was lucky enough to be able to afford before the housing crises. Even though I could sell and get a lot more than I paid for either, the fact is that unless I wanted to put that money into something other than a house I'm not going to turn a profit. I also have two daughters who are young adults and still living at home because they can't afford rent. So even for that reason alone I REALLY don't want expensive housing prices.

rcme 3y ago
> Even though I could sell and get a lot more than I paid for either, the fact is that unless I wanted to put that money into something other than a house I'm not going to turn a profit. You’re already profiting simply by having a higher net worth.
- mdavidn 3y ago
  How is higher net worth a benefit? Gains in a property are unrealized until sold or mortgaged.
  - BugsJustFindMe 3y ago
    > How is higher net worth a benefit? The benefit comes from gains being definitively accumulated by percentage. When your owned amount is higher, equal percent gain is greater absolute gain. > Gains are locked into a property until sold or mortgaged. This is essentially the equivalent of "Gains are locked into money until spent on goods or services." True. But gains are gains and worth is worth regardless of how many seconds or minutes it takes to spend. The only difference is immediate urgency of conversion within a very narrow time window (it does not take that long to get a mortgage on an owned property that is now worth X percent more than it was yesteryear).
    - gspencley 3y ago
      To an accountant you might have a point. To me, if it doesn't have a direct and measurable impact on my quality of life then it's a completely irrelevant factor. Maybe "profit" was a poor choice of words. But this has turned into an utterly meaningless semantic argument that has nothing to do with the point I was trying to make.
      - rcme 3y ago
        Is feeling secure in retirement not a relevant factor? Is having wealth to do things, even if you don’t exercise that wealth, a completely irrelevant factor? Is leaving generational wealth for your children irrelevant? Let’s say you had to forfeit the houses for some reason (being sued, for example). According to you, owning the houses is an completely irrelevant factor, so I’m safe to assume you would feel totally indifferent to this happening? Somehow, I find it hard to believe that you wouldn’t care about losing your houses. Perhaps it does have some relevance to your life?
        positr0n 3y ago
        > According to you, owning the houses is an completely irrelevant factor No, they're saying the price of the house is irrelevant. If they bought both houses for $250k, say they're now worth $750k, they're a millionaire and got a million dollars of profit! Their point is they need two houses for their family and will until they die. If they have two houses still worth $250k or two houses worth $750k it doesn't matter to their quality of life.
        dragonwriter 3y ago
        This would be true if we lived in a society where value of assetsd you own has no impact on access to and cost of financing, and other advantages, that can be realized without sacrificing the assets, but that is very much not the world we actually live in.
        deleted 3y ago
        [deleted]
        3y ago
  - deleted 3y ago
    [deleted]
  - antisthenes 3y ago
    So sell the extra property and enjoy the money? The benefit is having that option.
globular-toast 3y ago
If only more people understood that. Almost all homeowners think that rising prices is a good thing for them. Try convincing your average homeowner that the whole market going up by 10% makes no difference to them unless they plan on being homeless. There's something about money that brings out the worst in people, whether that be malice or simply stupidity.
- nerdponx 3y ago
  It matters if you enjoy screwing the next generation of first-time homebuyers!
- sokoloff 3y ago
  Or unless they’d consider downsizing or renting. House prices going up are generally good for owner-occupants.
  - lotsofpulp 3y ago
    For a homeowner that is not interested in selling or refinancing, the price going up itself is not good news. It really only means higher property taxes. However, home prices are, many times, also a reflection of the local economy and the earning and/or spending power of the locals (or tourists). And usually, higher earning/spending power is better than lower earning/spending power. You just have to ensure you are in position to grab a portion of that economic activity, which is a better situation to be in than trying to grab a portion of no or little economic activity in a struggling region.
    - sokoloff 3y ago
      In my city, property taxes are set to raise the needed city budget. If everyone’s property value doubled, the city budget would not double, but rather the tax rate per $1K would drop to raise the same revenue.
      - lotsofpulp 3y ago
stickyricky 3y ago
If cognitive dissonance was a hackernews comment.
nmca 3y ago
house prices evolve from price p0 to price p. The market gains (or loses) p/p0 in that period. If you get a mortgage, you're borrowing money to buy at p0; at any point in time with a price p and total repaid r your total value is given by (deposit + r + p) - p0. You're in negative equity if (deposit + r + p) < p0. You're in the money if p > p0, but note that this isn't multiplying your investment by the market gain. Instead, it's exposing you to the absolute change in price. So suppose (deposit + r) = 40k ; p0 = 145k ; p = 190k. You're in the money for 40k + 190k - 145k = 85k, having invested 40k (roi=2.1). p1/p0 = 1.3 (<2.1), with your leverage (mortgage) having bought you more exposure to house prices. You can then liquify and re-lever back into the housing market, with a larger loan due to you larger deposit (and likely increased income). Historically this has worked very well for people as p has tended to be larger than p0. It does not work well if you end up in negative equity. This is the reason that "you need housing so why would you want house prices to go up" -> some large fraction of homeowners are levered up to their eyeballs

rcme 3y ago

> Even though I could sell and get a lot more than I paid for either, the fact is that unless I wanted to put that money into something other than a house I'm not going to turn a profit. You’re already profiting simply by having a higher net worth.

mdavidn 3y ago
How is higher net worth a benefit? Gains in a property are unrealized until sold or mortgaged.
- BugsJustFindMe 3y ago
  > How is higher net worth a benefit? The benefit comes from gains being definitively accumulated by percentage. When your owned amount is higher, equal percent gain is greater absolute gain. > Gains are locked into a property until sold or mortgaged. This is essentially the equivalent of "Gains are locked into money until spent on goods or services." True. But gains are gains and worth is worth regardless of how many seconds or minutes it takes to spend. The only difference is immediate urgency of conversion within a very narrow time window (it does not take that long to get a mortgage on an owned property that is now worth X percent more than it was yesteryear).
  - gspencley 3y ago
    To an accountant you might have a point. To me, if it doesn't have a direct and measurable impact on my quality of life then it's a completely irrelevant factor. Maybe "profit" was a poor choice of words. But this has turned into an utterly meaningless semantic argument that has nothing to do with the point I was trying to make.
    - rcme 3y ago
      Is feeling secure in retirement not a relevant factor? Is having wealth to do things, even if you don’t exercise that wealth, a completely irrelevant factor? Is leaving generational wealth for your children irrelevant? Let’s say you had to forfeit the houses for some reason (being sued, for example). According to you, owning the houses is an completely irrelevant factor, so I’m safe to assume you would feel totally indifferent to this happening? Somehow, I find it hard to believe that you wouldn’t care about losing your houses. Perhaps it does have some relevance to your life?
      - positr0n 3y ago
        > According to you, owning the houses is an completely irrelevant factor No, they're saying the price of the house is irrelevant. If they bought both houses for $250k, say they're now worth $750k, they're a millionaire and got a million dollars of profit! Their point is they need two houses for their family and will until they die. If they have two houses still worth $250k or two houses worth $750k it doesn't matter to their quality of life.
        dragonwriter 3y ago
        This would be true if we lived in a society where value of assetsd you own has no impact on access to and cost of financing, and other advantages, that can be realized without sacrificing the assets, but that is very much not the world we actually live in.
        deleted 3y ago
        [deleted]
        3y ago
- deleted 3y ago
  [deleted]
- antisthenes 3y ago
  So sell the extra property and enjoy the money? The benefit is having that option.

globular-toast 3y ago

If only more people understood that. Almost all homeowners think that rising prices is a good thing for them. Try convincing your average homeowner that the whole market going up by 10% makes no difference to them unless they plan on being homeless. There's something about money that brings out the worst in people, whether that be malice or simply stupidity.

nerdponx 3y ago
It matters if you enjoy screwing the next generation of first-time homebuyers!
sokoloff 3y ago
Or unless they’d consider downsizing or renting. House prices going up are generally good for owner-occupants.
- lotsofpulp 3y ago
  For a homeowner that is not interested in selling or refinancing, the price going up itself is not good news. It really only means higher property taxes. However, home prices are, many times, also a reflection of the local economy and the earning and/or spending power of the locals (or tourists). And usually, higher earning/spending power is better than lower earning/spending power. You just have to ensure you are in position to grab a portion of that economic activity, which is a better situation to be in than trying to grab a portion of no or little economic activity in a struggling region.
  - sokoloff 3y ago
    In my city, property taxes are set to raise the needed city budget. If everyone’s property value doubled, the city budget would not double, but rather the tax rate per $1K would drop to raise the same revenue.
    - lotsofpulp 3y ago

stickyricky 3y ago

If cognitive dissonance was a hackernews comment.

nmca 3y ago

house prices evolve from price p0 to price p. The market gains (or loses) p/p0 in that period. If you get a mortgage, you're borrowing money to buy at p0; at any point in time with a price p and total repaid r your total value is given by (deposit + r + p) - p0. You're in negative equity if (deposit + r + p) < p0. You're in the money if p > p0, but note that this isn't multiplying your investment by the market gain. Instead, it's exposing you to the absolute change in price. So suppose (deposit + r) = 40k ; p0 = 145k ; p = 190k. You're in the money for 40k + 190k - 145k = 85k, having invested 40k (roi=2.1). p1/p0 = 1.3 (<2.1), with your leverage (mortgage) having bought you more exposure to house prices. You can then liquify and re-lever back into the housing market, with a larger loan due to you larger deposit (and likely increased income). Historically this has worked very well for people as p has tended to be larger than p0. It does not work well if you end up in negative equity. This is the reason that "you need housing so why would you want house prices to go up" -> some large fraction of homeowners are levered up to their eyeballs