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I recently bought a house that has increased in value by around 10% since I bought it. I’d be happy about it, but all I can think about what a struggle it was t

I recently bought a house that has increased in value by around 10% since I bought it. I’d be happy about it, but all I can think about what a struggle it was to find, bid on, and buy a home at the prices the market demanded at the time. Now it’s worse, and I profit from it for doing effectively nothing (assuming I sell when it is still valued higher). That’s not good. Not like this, at least. Maybe this was more appealing to people in the past because it wasn’t so overtly bad for communities and society.

willcipriano 3y ago
[flagged]
- sli 3y ago
  Shortsightedness like this tends to backfire spectacularly in the long-term.
  - goalonetwo 3y ago
    It is amazing how once someone becomes a homeowner, they become cheerleaders for unsustainable home prices (and vice versa). And I understand where it comes from. The mistake was to make housing an investment.
    - jacurtis 3y ago
      People tend to be really shortsighted when it comes to home prices. People get excited with the thought of selling their home and "extracting profit". But how do you extract profit? You still need another home, right? Unless you plan on downsizing then you are going to buy similar or larger to what you just sold. If your house value went up 30%, then likely the rest of your area did too. So if you want to buy something new, then all your profits go back to something that is the same as you already have. In the end you just end up in a similar home, but now with a worse interest rate. So where's that value extraction that everyone gets so excited about. Thats why home sales aren't happening right now. People fantisize about their home value but when they go to sell they realize they will probably end up worse off than when they started. For example. Let's say you bought a home for $300k and now it is worth $400k. Let's say they owe $250k on it. Nice 30% value, huh? Great, sell it. Now you have a cool $150k burning a hole in your pocket. But then you remember, oh i don't have anywhere to sleep tonight. So you go and buy a home that is similar to what you just sold. Well all those houses now cost $400k, thats why you were able to sell yours for that price in the first place. So now you use the $150k of money that you "extracted" as a downpayment on another $400k home and guess what, you're back to a $250k loan, which is exactly where you started. You didn't gain anything. Just now you are paying 6.5% interest on it instead of 3.5% interest. Which means your monthly mortgage actually increased by ~$650 a month for the same house. Great deal, huh?
    - bigstrat2003 3y ago
      Nobody was "cheering" that I saw. The person above was simply pointing out that there's nothing to feel bad about. My house also went up in theoretical value (by a lot more than 10%, too). Why on God's green earth should I feel guilty over something I had no control over whatever? I am neither happy (since I haven't realized any gains and so it would be premature to celebrate), nor do I feel bad (since I had no responsibility in causing the current state of the housing market).
- 15457345234 3y ago
  Your analogy falls apart because the 'train' you are 'on' is not moving. The people you are 'leaving behind' are still right there next to you. You don't live on Elysium. You have to go outside and interact with the people you're so smugly 'leaving behind.' Do you think Do Kwon is still telling people that they're NGMI? I somehow think not.
  - willcipriano 3y ago
    Economically speaking the train is moving. If you have only a high school degree your wages have declined in real terms[0], they continue to fall. With interest rates what they are now home ownership is a impossibility for most people who aren't going to inherit one or who didn't buy when rates were much lower. I'm not driving this train, I dont want it to be this way, what good will blaming myself do here? Should I apologize for seeing this coming? [0]https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7745920/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7745920/
    - 15457345234 3y ago
      > I dont want it to be this way Okay, but the smug tone of your prior post kinda contradicts that, which is why me and others responded the way they did. Hard to know how to have the conversation when you're responding like a completely different person from one comment to another really. Weird.
      - willcipriano 3y ago
        The "you can make more money renting and investing" crowd should consider my remarks smug. People too poor to afford homes who are now cut off from doing so for probably the next half decade, mainly because central banks would perfer they stave than asset prices fall, should probably riot.
        15457345234 3y ago
        Ah okay, the smug tone is because you want people to get frustrated and riot. Yeah, I kinda figured that already. Wrecker.
- steve_adams_86 3y ago
  If my actions benefit me and not my neighbour to such a degree, the train will cease to function at all. And I don’t enjoy my comfort when I’m surrounded by people struggling. It’s poisonous to my community.
mulmen 3y ago
The only way to profit is to sell, if you do that where would you live?
- usefulcat 3y ago
  Somewhere where housing is less expensive, perhaps?
- steve_adams_86 3y ago
  Many people here have sold and moved to one of the many beautiful towns on our island that are closer to nature, cheaper, and easy to “buy up” in terms of lifestyle. In turn, that has dramatically boosted prices in those towns. Hypothetically (I expect the inverse to happen), if my value increases at this rate until my kids are moved out, I can sell this place for $1.5M. That would get me a LOT of house in one of those towns. But why? Who does that benefit? And does it push locals out of those towns, over time? I don’t want to maintain some kind of housing homeostasis where values remain the same and no one moves. But the time scale here is ridiculous and it’s dramatically changing my region in bad ways, and I don’t see any net positives outside of very few people’s bank accounts. Yet like I said, I do expect it to go the other way. I expected to lose 10% by now, not gain it. There should be a correction at some point, or things are going to be radically different where I live very soon. People are really at their limits.
  - mulmen 3y ago
    Housing is a necessity. It shouldn’t outpace changes in the price of milk or gasoline. That it does should scare the hell out of us. The fact is we have painted ourselves into a corner by propping up insane housing valuations. I’m not sure what to even do about it at this point. Houses cost an order of magnitude more than they should but any correction will destroy the middle class.
Aurornis 3y ago
Don't be too sure about that 10% increase in value. Online estimates are generally not great and may simply be guessing from past momentum. Even if it really did increase 10%, you'd be giving up a lot of that difference in all of the various costs involved with selling a house and moving, even if you could cut agent costs to $0. I have some friends who became real estate agents and thought they'd use their position to flip houses while being their own agents to save on costs. They're learning the hard way that even when you're not paying agent fees, buying, selling, and holding homes is expensive.
- goalonetwo 3y ago
  Most people don't understand opportunity cost or time-value of money. How good an investment is it after you remove the realtor fees, closing fees, HOA, taxes, repair and compare it to a steady 7% on average on the SP500? At a minimum your house MUST go up 10% over a couple years to get even.
  - ethbr1 3y ago
    The key point here is leveraging, given that an average US mortgage is 6.5x to 20x. And that leverage is broadly available to most people, supported (and funded) by government policies.
    - lotsofpulp 3y ago
      And it is a non-callable loan, unlike borrowing $300k from your brokerage to invest in VOO. And many states require it to be a non recourse loan. And due to the backing of the federal government, it offers a 30 year fixed rate. The public subsidies are insane.
      - ethbr1 3y ago
        Non-callable, can be refinanced at buyer's discretion, broadly standardized so there's a competitive mortgage originator/refinancing market, and can be borrowed against by using that same market (HELOC or home equity loan) There's a lot of mortgage features that make it attractive to "I'm not an Accredited Investor" types.
goalonetwo 3y ago
It is unsustainable. Currently housing is priced as if it was going to increase 10% a year forever (and if that is not the case, you are almost always better off renting right now). There are multiple factors that pushed the prices artificially up since 2020. They will look retrospectively obvious (as the 2008 subprime crisis seem obvious now). I'm usually not in favor of timing the market but I believe we are currently in the single worst time to buy a house in history.
- breckenedge 3y ago
  Why is it unsustainable? Housing starts are at the lowest since 2019, and people couldn’t afford them if they did build them. People who bought a home before 18mo ago will have very little incentive to sell until interest rates decline, which doesn’t seem to be on the horizon as long as inflation stays higher than 2%.
  - 01100011 3y ago
    Multifamily is being built like crazy. Just got back from Sacramento and they were building units for as far as I could see. Same thing in many markets. Go back and read articles from 2006. They said housing prices were fine because we were lacking supply and had underbuilt for years. Then suddenly we had too many houses. Affordability matters appreciation expectations matter. Credit matters. Employment matters. People will always sell. They can only hold off so long.
    - breckenedge 3y ago
      Multi-family is overbuilt in many markets, including here in Dallas. It’s just not the same market as homes. I was around in 2006. We didn’t have too many houses then, we had people granted credit on dubious applications, ARMs bundled up as AAA credit. That’s not going to repeat. And if it does, it’ll be nationwide all at once, rather than market-by-market like last time. Certainly if there is a major jobs crash, then people cannot afford their mortgage. But the government doesn’t like this and they’ll step in again like they always do.
LeifCarrotson 3y ago
Just 10%? Eight years ago, I bought a house that has increased in value from $120k to $350k (validated both by Zillow and by recent sales in the neighborhood of nearly-identical houses). And for a mortgage whose interest has been less than the price of inflation! I'd be happy about it too, but am overwhelmed by guilt when talking to my intern, our newly hired engineer, my younger siblings, and many of my friends who rent at ever-increasing rates. That $230,000 was taken from the pockets of my non-homeowning friends. I don't understand how so many seem to be cheering the rising prices, oblivious to what it's doing to our society.
- 6502nerdface 3y ago
  > That $230,000 was taken from the pockets of my non-homeowning friends. Nope! First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper. Second of all, when you do sell it, the money will come from the pockets of your willing buyer :-) Edit: if you still want to feel bad about something, let it be this: that the rise in your home's value represents wealth that has been created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and your ability to capture all of that increase via your untaxed monopoly on the ground rent creates a deadweight loss for the broader economy. But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)
  - pj_mukh 3y ago
    This is a house, presumably close to a job. Not an optional night out. It’s by no means a “willing” buyer. Mostly a “I need this to survive” buyer. Homeowners with this much gain based on artificial supply constraints should definitely feel bad.
    - thghtihadanacct 3y ago
      Again, if they sell ... my house has doubled in value ... its still the same house I bought. I would only realize some gain if I put it on the market. What it is now is just another house not for sale and I happen to live in it. This is the same uneducated statement people make about prop 13 in California ... 'oh your house is worth a million so youre a millionaire' ... oh?
Simulacra 3y ago
Ours has increased by 30% but the thought of selling and then, having to enter this market, is nuts. I won't say it's not tempting to extract some of that value, but not now
- chasd00 3y ago
  Mine has increased in the neighborhood, maybe around 40%. I have no desire to sell until my boys move out in about 6-7 years.
jacurtis 3y ago
eh... don't pop the Champaign on your 10% value increase just yet It's only worth 10% more when you sell it for 10% more. Right now home closings (the finalized deals) are 50% lower than before the pandemic and lower than in 2007. So selling your house to get that 10% increase is going to be hard. But even if you did sell it, then it isn't quite worth celebrating yet, because it is likely that your 10% increase estimate is because the entire market is selling 10% higher. So the problem with this is that if you sell your house and take your handsome 10% profit, you still can't pop the champaign because as it turns out... having a home is one of those sort of necessary things of survival. So if you want to go out and buy another home that is roughly similar to the one you previously had, then it will cost you 10% more than the last time you bought a house, which just so happens to be roughly the same price that you just sold for, so you end up not really making anything. But wait, there's more. Because you sold you need to pay closing fees, which includes generally 6% (see article) in agent fees, plus various closing costs which generally come out to around 10-15% of the home price. So you gained 10% in the sale price of your home, but you lose 10% or more when you close the deal, which wipes out your "profits". Oh, but you only bought a house "recently" which means you probably lost 10-20% in closing fees when you bought it. So your investment is actually more like 110% - 120% of the value of the home. So again, gaining 10% value just brings you up to even. But add the seller closing fees (mentioned above) and it pulls you back down, to losing money. Oh, and now with the cash in hand you buy the next house which is 10% more than before and interest rates are probably several percentages points higher than before as well. So not only is the house 10% more, plus you lost 10% in your last deal, but now your payment will be higher even on the same loan amount thanks to higher interest rates. People underestimate interest rates all the time too. Let's say you had a $400k loan before at 4.5% interest. Well the 30yr fixed payment on that is around $2,500 /mo. Now lets say you do all the shenanigans above and end up with another $400k loan again in 2023, but it is 6.5% interest. It is only a 2 point increase in interest, not a big deal right? Wrong. The same loan amount but on 6.5% interest is $3,000 /mo. So you are now paying $500 a month more for the same loan and home value as just 18 months ago and you would pay 20% more over the lifetime of the loan. Just to instill the shock and awe effectively, I will use the same real numbers as above. Let's say you had a $400k loan at 4.5% interest before (the early 2022 rate). You would have paid $851,626.85 over the lifetime of your loan on that. Now the same loan ($400k) but at the late 2023 rate of 6.5%, because you wanted to sell your house for that 10% profit, remember? Now the same loan amount will cost you $1,036,344.62 over the lifetime of the loan. The house just got $150k more expensive even though the sticker price on Zillow looks like it has been flat since 2022. So... still excited about your 10% home value?
chii 3y ago
> for doing effectively nothing you're not doing labour. You're injecting capital into the system. The person who sold the house to you, presumably, is using the proceeds of their sale (and profit) to do something else productive. I don't get why so many people consider taking asset risk as "doing nothing".
- moomoo11 3y ago
  I’m a capitalist but housing, like a place of shelter for you and your family, should be in a separate asset class. Just lock up housing so that a single individual can’t own more than 3 homes. Get married you get six houses you can own. If that’s not enough maybe you need to reassess whether it makes sense to dump money into a house or put it to some actual better use. Like creating jobs or new products.
- rcpt 3y ago
  You forgot about land. Land is different from capital. A competition where we all try to outbid each other on land does nothing for the economy.
  - chii 3y ago
    it does, just more round-a-bout. The land does not have infinite value. If you overpaid for the land, you will have lost that value to the seller. Therefore, these bidding is really just a price discovery mechanism. Unfortunately, because the transaction costs are high, and land being quite illiquid, the price doesn't rapidly converge to the "correct" one (aka, the true price might've moved faster than the bidding can catches up). > does nothing for the economy. Unless if the seller only ever reinvest into more land (and that seller also only reinvest into more land, ad-infinitum), the capital freed up from a sale will lubricate another sector of the economy.
seanmcdirmid 3y ago
That 10% probably barely covers sell/buy commissions, let alone maintenance, inflation, and interest. If you sold now, it would actually be at an effective loss. You don’t need to feel guilty about a 10% increase, you aren’t really profiting at that point.
- steve_adams_86 3y ago
  The thing is, I haven’t even lived in it yet. It’s increasing in value at a rate that doesn’t make sense for the community where it was built. I don’t think I’m getting rich or something, it’s just bizarre to me that a home can increase in value before it’s even built and continue to as it’s built. On paper I bought it for more than 10% less than identical neighbouring builds, but nothing has changed about the homes.
  - seanmcdirmid 3y ago
    It isn't built yet? The price of a house is simply a matter of supply and demand. If you buy when supply is more abundant and demand less so, you'll get a better price. Right now, there is a supply crunch in housing (because interest rates are high, the second hand market is really low volume), that means available inventory has a higher price. If you want a year later, the dynamic will be different.
artursapek 3y ago
The sad part is, you didn't really "profit" if the broader area you live in is up 10%.
- steve_adams_86 3y ago
  You’re right, and this is why so many people sold in my area and moved to cheaper areas. That has had a dramatic negative impact on those small towns, and their values (and property taxes) have exploded as a result. It’s a concerning situation. I don’t plan to sell or leave to another place. I’m just disconcerted by buying a home and having the value increase before I ever set foot in it. That’s not normal, and it signals bad things are coming (to me).
m463 3y ago
> struggle it was to find, bid on, and buy a home I would REALLY hate to do this electronically. We might replace people with something like ticketmaster or the "get a flight/hotel/car" mess.
vidarh 3y ago
My house has more than doubled in value, and I'm not at all happy about it, because apart from the moral issues of access to housing, on a purely selfish note, I, as most people, are more interested in trading up than down, and as my house has doubled, so have the more expensive houses I might want to move to. Effectively, rising house prices harm me too, not just first time buyers House prices increasing are only a benefit to people treating it as an investment, and if it's your primary home, then that means planning for trading down.

willcipriano 3y ago

[flagged]

sli 3y ago
Shortsightedness like this tends to backfire spectacularly in the long-term.
- goalonetwo 3y ago
  It is amazing how once someone becomes a homeowner, they become cheerleaders for unsustainable home prices (and vice versa). And I understand where it comes from. The mistake was to make housing an investment.
  - jacurtis 3y ago
    People tend to be really shortsighted when it comes to home prices. People get excited with the thought of selling their home and "extracting profit". But how do you extract profit? You still need another home, right? Unless you plan on downsizing then you are going to buy similar or larger to what you just sold. If your house value went up 30%, then likely the rest of your area did too. So if you want to buy something new, then all your profits go back to something that is the same as you already have. In the end you just end up in a similar home, but now with a worse interest rate. So where's that value extraction that everyone gets so excited about. Thats why home sales aren't happening right now. People fantisize about their home value but when they go to sell they realize they will probably end up worse off than when they started. For example. Let's say you bought a home for $300k and now it is worth $400k. Let's say they owe $250k on it. Nice 30% value, huh? Great, sell it. Now you have a cool $150k burning a hole in your pocket. But then you remember, oh i don't have anywhere to sleep tonight. So you go and buy a home that is similar to what you just sold. Well all those houses now cost $400k, thats why you were able to sell yours for that price in the first place. So now you use the $150k of money that you "extracted" as a downpayment on another $400k home and guess what, you're back to a $250k loan, which is exactly where you started. You didn't gain anything. Just now you are paying 6.5% interest on it instead of 3.5% interest. Which means your monthly mortgage actually increased by ~$650 a month for the same house. Great deal, huh?
  - bigstrat2003 3y ago
    Nobody was "cheering" that I saw. The person above was simply pointing out that there's nothing to feel bad about. My house also went up in theoretical value (by a lot more than 10%, too). Why on God's green earth should I feel guilty over something I had no control over whatever? I am neither happy (since I haven't realized any gains and so it would be premature to celebrate), nor do I feel bad (since I had no responsibility in causing the current state of the housing market).
15457345234 3y ago
Your analogy falls apart because the 'train' you are 'on' is not moving. The people you are 'leaving behind' are still right there next to you. You don't live on Elysium. You have to go outside and interact with the people you're so smugly 'leaving behind.' Do you think Do Kwon is still telling people that they're NGMI? I somehow think not.
- willcipriano 3y ago
  Economically speaking the train is moving. If you have only a high school degree your wages have declined in real terms[0], they continue to fall. With interest rates what they are now home ownership is a impossibility for most people who aren't going to inherit one or who didn't buy when rates were much lower. I'm not driving this train, I dont want it to be this way, what good will blaming myself do here? Should I apologize for seeing this coming? [0]https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7745920/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7745920/
  - 15457345234 3y ago
    > I dont want it to be this way Okay, but the smug tone of your prior post kinda contradicts that, which is why me and others responded the way they did. Hard to know how to have the conversation when you're responding like a completely different person from one comment to another really. Weird.
    - willcipriano 3y ago
      The "you can make more money renting and investing" crowd should consider my remarks smug. People too poor to afford homes who are now cut off from doing so for probably the next half decade, mainly because central banks would perfer they stave than asset prices fall, should probably riot.
      - 15457345234 3y ago
        Ah okay, the smug tone is because you want people to get frustrated and riot. Yeah, I kinda figured that already. Wrecker.
steve_adams_86 3y ago
If my actions benefit me and not my neighbour to such a degree, the train will cease to function at all. And I don’t enjoy my comfort when I’m surrounded by people struggling. It’s poisonous to my community.

mulmen 3y ago

The only way to profit is to sell, if you do that where would you live?

usefulcat 3y ago
Somewhere where housing is less expensive, perhaps?
steve_adams_86 3y ago
Many people here have sold and moved to one of the many beautiful towns on our island that are closer to nature, cheaper, and easy to “buy up” in terms of lifestyle. In turn, that has dramatically boosted prices in those towns. Hypothetically (I expect the inverse to happen), if my value increases at this rate until my kids are moved out, I can sell this place for $1.5M. That would get me a LOT of house in one of those towns. But why? Who does that benefit? And does it push locals out of those towns, over time? I don’t want to maintain some kind of housing homeostasis where values remain the same and no one moves. But the time scale here is ridiculous and it’s dramatically changing my region in bad ways, and I don’t see any net positives outside of very few people’s bank accounts. Yet like I said, I do expect it to go the other way. I expected to lose 10% by now, not gain it. There should be a correction at some point, or things are going to be radically different where I live very soon. People are really at their limits.
- mulmen 3y ago
  Housing is a necessity. It shouldn’t outpace changes in the price of milk or gasoline. That it does should scare the hell out of us. The fact is we have painted ourselves into a corner by propping up insane housing valuations. I’m not sure what to even do about it at this point. Houses cost an order of magnitude more than they should but any correction will destroy the middle class.

Aurornis 3y ago

Don't be too sure about that 10% increase in value. Online estimates are generally not great and may simply be guessing from past momentum. Even if it really did increase 10%, you'd be giving up a lot of that difference in all of the various costs involved with selling a house and moving, even if you could cut agent costs to $0. I have some friends who became real estate agents and thought they'd use their position to flip houses while being their own agents to save on costs. They're learning the hard way that even when you're not paying agent fees, buying, selling, and holding homes is expensive.

goalonetwo 3y ago
Most people don't understand opportunity cost or time-value of money. How good an investment is it after you remove the realtor fees, closing fees, HOA, taxes, repair and compare it to a steady 7% on average on the SP500? At a minimum your house MUST go up 10% over a couple years to get even.
- ethbr1 3y ago
  The key point here is leveraging, given that an average US mortgage is 6.5x to 20x. And that leverage is broadly available to most people, supported (and funded) by government policies.
  - lotsofpulp 3y ago
    And it is a non-callable loan, unlike borrowing $300k from your brokerage to invest in VOO. And many states require it to be a non recourse loan. And due to the backing of the federal government, it offers a 30 year fixed rate. The public subsidies are insane.
    - ethbr1 3y ago
      Non-callable, can be refinanced at buyer's discretion, broadly standardized so there's a competitive mortgage originator/refinancing market, and can be borrowed against by using that same market (HELOC or home equity loan) There's a lot of mortgage features that make it attractive to "I'm not an Accredited Investor" types.

goalonetwo 3y ago

It is unsustainable. Currently housing is priced as if it was going to increase 10% a year forever (and if that is not the case, you are almost always better off renting right now). There are multiple factors that pushed the prices artificially up since 2020. They will look retrospectively obvious (as the 2008 subprime crisis seem obvious now). I'm usually not in favor of timing the market but I believe we are currently in the single worst time to buy a house in history.

breckenedge 3y ago
Why is it unsustainable? Housing starts are at the lowest since 2019, and people couldn’t afford them if they did build them. People who bought a home before 18mo ago will have very little incentive to sell until interest rates decline, which doesn’t seem to be on the horizon as long as inflation stays higher than 2%.
- 01100011 3y ago
  Multifamily is being built like crazy. Just got back from Sacramento and they were building units for as far as I could see. Same thing in many markets. Go back and read articles from 2006. They said housing prices were fine because we were lacking supply and had underbuilt for years. Then suddenly we had too many houses. Affordability matters appreciation expectations matter. Credit matters. Employment matters. People will always sell. They can only hold off so long.
  - breckenedge 3y ago
    Multi-family is overbuilt in many markets, including here in Dallas. It’s just not the same market as homes. I was around in 2006. We didn’t have too many houses then, we had people granted credit on dubious applications, ARMs bundled up as AAA credit. That’s not going to repeat. And if it does, it’ll be nationwide all at once, rather than market-by-market like last time. Certainly if there is a major jobs crash, then people cannot afford their mortgage. But the government doesn’t like this and they’ll step in again like they always do.

LeifCarrotson 3y ago

Just 10%? Eight years ago, I bought a house that has increased in value from $120k to $350k (validated both by Zillow and by recent sales in the neighborhood of nearly-identical houses). And for a mortgage whose interest has been less than the price of inflation! I'd be happy about it too, but am overwhelmed by guilt when talking to my intern, our newly hired engineer, my younger siblings, and many of my friends who rent at ever-increasing rates. That $230,000 was taken from the pockets of my non-homeowning friends. I don't understand how so many seem to be cheering the rising prices, oblivious to what it's doing to our society.

6502nerdface 3y ago
> That $230,000 was taken from the pockets of my non-homeowning friends. Nope! First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper. Second of all, when you do sell it, the money will come from the pockets of your willing buyer :-) Edit: if you still want to feel bad about something, let it be this: that the rise in your home's value represents wealth that has been created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and your ability to capture all of that increase via your untaxed monopoly on the ground rent creates a deadweight loss for the broader economy. But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)
- pj_mukh 3y ago
  This is a house, presumably close to a job. Not an optional night out. It’s by no means a “willing” buyer. Mostly a “I need this to survive” buyer. Homeowners with this much gain based on artificial supply constraints should definitely feel bad.
  - thghtihadanacct 3y ago
    Again, if they sell ... my house has doubled in value ... its still the same house I bought. I would only realize some gain if I put it on the market. What it is now is just another house not for sale and I happen to live in it. This is the same uneducated statement people make about prop 13 in California ... 'oh your house is worth a million so youre a millionaire' ... oh?

Simulacra 3y ago

Ours has increased by 30% but the thought of selling and then, having to enter this market, is nuts. I won't say it's not tempting to extract some of that value, but not now

chasd00 3y ago
Mine has increased in the neighborhood, maybe around 40%. I have no desire to sell until my boys move out in about 6-7 years.

jacurtis 3y ago

eh... don't pop the Champaign on your 10% value increase just yet It's only worth 10% more when you sell it for 10% more. Right now home closings (the finalized deals) are 50% lower than before the pandemic and lower than in 2007. So selling your house to get that 10% increase is going to be hard. But even if you did sell it, then it isn't quite worth celebrating yet, because it is likely that your 10% increase estimate is because the entire market is selling 10% higher. So the problem with this is that if you sell your house and take your handsome 10% profit, you still can't pop the champaign because as it turns out... having a home is one of those sort of necessary things of survival. So if you want to go out and buy another home that is roughly similar to the one you previously had, then it will cost you 10% more than the last time you bought a house, which just so happens to be roughly the same price that you just sold for, so you end up not really making anything. But wait, there's more. Because you sold you need to pay closing fees, which includes generally 6% (see article) in agent fees, plus various closing costs which generally come out to around 10-15% of the home price. So you gained 10% in the sale price of your home, but you lose 10% or more when you close the deal, which wipes out your "profits". Oh, but you only bought a house "recently" which means you probably lost 10-20% in closing fees when you bought it. So your investment is actually more like 110% - 120% of the value of the home. So again, gaining 10% value just brings you up to even. But add the seller closing fees (mentioned above) and it pulls you back down, to losing money. Oh, and now with the cash in hand you buy the next house which is 10% more than before and interest rates are probably several percentages points higher than before as well. So not only is the house 10% more, plus you lost 10% in your last deal, but now your payment will be higher even on the same loan amount thanks to higher interest rates. People underestimate interest rates all the time too. Let's say you had a $400k loan before at 4.5% interest. Well the 30yr fixed payment on that is around $2,500 /mo. Now lets say you do all the shenanigans above and end up with another $400k loan again in 2023, but it is 6.5% interest. It is only a 2 point increase in interest, not a big deal right? Wrong. The same loan amount but on 6.5% interest is $3,000 /mo. So you are now paying $500 a month more for the same loan and home value as just 18 months ago and you would pay 20% more over the lifetime of the loan. Just to instill the shock and awe effectively, I will use the same real numbers as above. Let's say you had a $400k loan at 4.5% interest before (the early 2022 rate). You would have paid $851,626.85 over the lifetime of your loan on that. Now the same loan ($400k) but at the late 2023 rate of 6.5%, because you wanted to sell your house for that 10% profit, remember? Now the same loan amount will cost you $1,036,344.62 over the lifetime of the loan. The house just got $150k more expensive even though the sticker price on Zillow looks like it has been flat since 2022. So... still excited about your 10% home value?

chii 3y ago

> for doing effectively nothing you're not doing labour. You're injecting capital into the system. The person who sold the house to you, presumably, is using the proceeds of their sale (and profit) to do something else productive. I don't get why so many people consider taking asset risk as "doing nothing".

moomoo11 3y ago
I’m a capitalist but housing, like a place of shelter for you and your family, should be in a separate asset class. Just lock up housing so that a single individual can’t own more than 3 homes. Get married you get six houses you can own. If that’s not enough maybe you need to reassess whether it makes sense to dump money into a house or put it to some actual better use. Like creating jobs or new products.
rcpt 3y ago
You forgot about land. Land is different from capital. A competition where we all try to outbid each other on land does nothing for the economy.
- chii 3y ago
  it does, just more round-a-bout. The land does not have infinite value. If you overpaid for the land, you will have lost that value to the seller. Therefore, these bidding is really just a price discovery mechanism. Unfortunately, because the transaction costs are high, and land being quite illiquid, the price doesn't rapidly converge to the "correct" one (aka, the true price might've moved faster than the bidding can catches up). > does nothing for the economy. Unless if the seller only ever reinvest into more land (and that seller also only reinvest into more land, ad-infinitum), the capital freed up from a sale will lubricate another sector of the economy.

seanmcdirmid 3y ago

That 10% probably barely covers sell/buy commissions, let alone maintenance, inflation, and interest. If you sold now, it would actually be at an effective loss. You don’t need to feel guilty about a 10% increase, you aren’t really profiting at that point.

steve_adams_86 3y ago
The thing is, I haven’t even lived in it yet. It’s increasing in value at a rate that doesn’t make sense for the community where it was built. I don’t think I’m getting rich or something, it’s just bizarre to me that a home can increase in value before it’s even built and continue to as it’s built. On paper I bought it for more than 10% less than identical neighbouring builds, but nothing has changed about the homes.
- seanmcdirmid 3y ago
  It isn't built yet? The price of a house is simply a matter of supply and demand. If you buy when supply is more abundant and demand less so, you'll get a better price. Right now, there is a supply crunch in housing (because interest rates are high, the second hand market is really low volume), that means available inventory has a higher price. If you want a year later, the dynamic will be different.

artursapek 3y ago

The sad part is, you didn't really "profit" if the broader area you live in is up 10%.

steve_adams_86 3y ago
You’re right, and this is why so many people sold in my area and moved to cheaper areas. That has had a dramatic negative impact on those small towns, and their values (and property taxes) have exploded as a result. It’s a concerning situation. I don’t plan to sell or leave to another place. I’m just disconcerted by buying a home and having the value increase before I ever set foot in it. That’s not normal, and it signals bad things are coming (to me).

m463 3y ago

> struggle it was to find, bid on, and buy a home I would REALLY hate to do this electronically. We might replace people with something like ticketmaster or the "get a flight/hotel/car" mess.

vidarh 3y ago

My house has more than doubled in value, and I'm not at all happy about it, because apart from the moral issues of access to housing, on a purely selfish note, I, as most people, are more interested in trading up than down, and as my house has doubled, so have the more expensive houses I might want to move to. Effectively, rising house prices harm me too, not just first time buyers House prices increasing are only a benefit to people treating it as an investment, and if it's your primary home, then that means planning for trading down.