14 ms·

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

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?
    - mbauman 3y ago
      Baloney. You have a house with relatively stable monthly payments. You will be able to purchase another hour if and when you need to move. You have a nest egg. It doesn’t matter when you sell because now you’re floating on the water. As the tide rises, so do you.
      - kelnos 3y ago
        The problem is that in California, the owner is still paying taxes on an assessed value only a little bit higher than what they paid for it initially. If they sell that house, and then buy something new at a similar market rate, their property taxes will balloon overnight, because the assessments "reset" to the purchase price when the property changes hands. The only way this works out great is if, after selling this house, they move to a new area (possibly new state) with lower cost-of-living, and possibly a more sane property tax regime. (Not sure the person way upthread is in California, but someone lower down mentioned Prop 13, so I thought I'd bring this up.)
        Guvante 3y ago
        1% property taxes are ~15% of my mortgage payment in CA. I would pay 50% more if I upgraded with the same debt amount due to interest.
      - jjav 3y ago
        > You will be able to purchase another hour if and when you need to move. Say you bougt a house for 200K many years ago. Your neighbor bought the slightly larger house next door for 275K back then. Your house is worth 1M now. Can you move? Sure, you can sell your house at a nice profit (and pay taxes on that!!). The neighbors house is worth maybe 1.2M now. So you can't really afford to move. Housing gains on paper are not income and you can't cash in on it unless you move out to a much cheaper area. Otherwise whatever gains you had on paper also apply to the nearby houses, so you can't afford them.
        mbauman 3y ago
- eru 3y ago
  Opportunity costs are real.
  - thghtihadanacct 3y ago
    So is gravity and rainbows. You just gotta get what you can
- thghtihadanacct 3y ago
  and taxes ... while prop 13 keeps property taxes reasonably down for legacy home owners there is nothing blocking capital gains
  - lotsofpulp 3y ago
    Prop 13 is only in California, and previous poster was talking about sub $350k houses, which makes it very, very unlikely they are in California.
    - thghtihadanacct 3y ago
      Fair enough but same idea. Any appreciation on a home you live in is moot. Its a house, its a home ... its not an investment. Anyone that leverages their home is an idiot. ... and capital gains applies anywhere but i guess if they are selling a house not in cali there might not be enough gains to worry about the IRS.
      - eru 3y ago
        Leveraging homes is almost universal when acquiring property: that's exactly what a mortgage is. Why do you call everyone who has a mortgage an idiot? Capital gains don't necessarily apply everywhere. In eg Australia your owner occupied house is exempt. And in eg Singapore we don't have capital gains on any asset at all. A house is both a home and an investment for most people. That's just a description of what's happening. However you could say that a house _should_ not be an investment.
        thghtihadanacct 3y ago
        Australia?!? Who gives an f about australia or singapore? What youre saying is your arguments have no merit against mine... Cuz mine operate for the place I live in. I understand your gross under generalization ... but if you are living in a house its only worth is a roof over your head.
        3y ago
- landryraccoon 3y ago
  If your phone and your laptop were suddenly worth twice as much would you also be celebrating? I am struggling to find the right words to express how wrong your view is to me. Housing is a basic human need like food and clothing. How can you in good conscience celebrate making a tremendous profits exploiting the fact that people cannot afford a basic need?
  - claytongulick 3y ago
    > How can you in good conscience celebrate making a tremendous profits exploiting the fact that people cannot afford a basic need? I'm completely missing your point. If I buy property in a developing area because I think it's cool, and I live there for years and am part of the community and watch it grow around me, and years later decide to sell - I took an early risk, don't I deserve to recognize the rewards from that risk? If it was a bad risk and the area went to hell, and I lost money - is that ok? But making money isn't? Should home builders not be allowed to make money because housing is a basic human need? Should we not be allowed to build luxury homes that cost more because we could have built multiple cheaper ones with the same money? What should the rules be, in your opinion?
    - satvikpendem 3y ago
      Singapore has a good model that allows most of its citizenry to own homes. Basically, it competes with home builders directly. If they don't want to build, the government will do so. https://youtu.be/3dBaEo4QplQ?si=r_3FWkZJLBvWAxJ_ https://youtu.be/3dBaEo4QplQ?si=r_3FWkZJLBvWAxJ_
      - mixmastamyk 3y ago
        Oh, folks want to build, that’s for sure. They’ve been prevented, and sometimes still are.
        satvikpendem 3y ago
        In Singapore, the state has vast eminent domain powers and is exempt from all zoning laws, which is covered in the video. I'm not sure that would ever fly in the US.
- kelnos 3y ago
  That "wealth created by the community" is often really "there is high housing demand, but the community of housing owners refuse to allow reasonable increases in density, which has the effect of increasing their home values". When the people who "generate wealth" are doing so by dictating prices, that seems a bit sketchy to me. The ironic thing is that housing scarcity often ends up making a place much less desirable -- even for the entrenched homeowners who cause the scarcity problem.
- rcpt 3y ago
  > it's come from no one's pockets until you sell Assuming that property tax has been tracking the current market value of the house then yes. But in California prop 13 means that isn't the case
- benjaminwootton 3y ago
  The more important point is that you will take that extra money and more and give it to the next willing seller who you are buying from. Rising property prices don’t do much for you at all until you are ready to trade down or leave the market.
- AnthonyMouse 3y ago
  > 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. It comes from their pockets when they pay rent. Meanwhile you, as a property owner, receive thousands of dollars a month in imputed rent by owning a place to live. You also have the ability to spend the money without selling the property by borrowing against the equity, as many people do. > Second of all, when you do sell it, the money will come from the pockets of your willing buyer People "willingly" subscribe to Comcast. Not because they prefer doing business with Comcast or believe themselves to be getting a fair deal. > if you still want to feel bad about something, let it be this: The people celebrating the increase in housing costs because they own housing should feel bad about it. Especially the ones who caused it by lobbying for zoning restrictions. > But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!) This doesn't actually fix housing shortages created by restrictive zoning -- which you could conceivably still have with a land value tax and a government that keeps the restrictive zoning to maximize land values and therefore tax revenue. (Land is worth a lot more if you need it proportionally to build housing instead of just buying one piece of land to build an arbitrarily large amount of housing by building an arbitrarily tall building.)
smeej 3y ago
Take out a HELOC at the now-current interest rates and give the money to your affected friends to pay them back. You'll probably have to sign a letter saying it's a gift, not a loan, if they want to use the money toward a down payment, but if you sincerely feel like you have taken money from their pockets, this is a way you can give it back.
- nicup12345689 3y ago
  I think he's just doing this ritual cleanse of: I feel bad then I can feel good. It's all happening in his head, meanwhile out there, nothing changed.
  - smeej 3y ago
    I do too. The subtext of this is definitely, "Oh really? Let's see you put your money where your mouth is."
- jwestbury 3y ago
  Not GP here, but speaking for myself: I bought a house at low interest rates, using tech wages that aren't commensurate at all to the standard wages in my hometown where I bought the house. What I'm doing now is renting out that house at less than my mortgage whilst living in a different country with higher taxes and which generally takes better care of its people (the blight that is the Tories notwithstanding). That said, you can't expect people not to play the game if they're forced to play the game. Those of us in the western world pretty much all live in capitalist countries; the best we can do is ensure that we're doing well in our own lives whilst trying to fix the game for those who aren't doing so well. Taking out a HELOC and giving the money to friends is a substantial financial risk that jeopardises our own comfort without having a clear positive impact on those friends and without really fixing the underlying problem. It's like giving cash to a homeless person instead of giving them housing and support -- the cash will be gone soon, and the system that resulted in their homelessness won't be fixed, nor will you have prevented any future homelessness. tl;dr, you can own a house and live comfortably whilst still lamenting the fact that your friends can't, and this isn't an inherently hypocritical stance. You're just lamenting the fact that the game you're playing necessarily has winners and losers, and wishing that would change.
chasebank 3y ago
Perhaps it’s just rapid inflation, goods and services have yet to catch up? Only time will tell. $100 today is most definitely not $100 from 8 years ago.
landryraccoon 3y ago
I agree, and I’m profoundly disappointed that people are celebrating the infliction of such misery on a younger generation. If the food in your fridge or the clothes in your closet were suddenly drastically more expensive and you could make a profit selling them, would that be a good sign for your society and community? Would you view it as a sign of prosperity that your well stocked pantry was now a source of funds you can tap by selling to starving people? Housing is a basic human need and it’s all but unaffordable. Even if you personally profit surely you can see that this is corrosive to society as a whole.
RHSeeger 3y ago
> 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. You bought a house and you live in it. Feeling guilt over something that isn't your fault makes no sense. If it makes you feel _better_ to try to help solve the problem, that's great; but that's totally different than guilt. Just like it's not right to feel bad that you can't keep up with the Joneses, its not right to feel guilty that the Smiths can't keep up with you.
putlake 3y ago
It's true that the last 15 years have been a fantastic time to buy a house. And yes, you are better off compared to those who didn't do that because they were too young or didn't have the money. But don't ever feel bad about this because you're basically treading water with inflation: 1. Through the years you own your home, you will pay roughly 1% of the notional value of the property in state and local property taxes EACH YEAR. You already know this. 2. When you sell your house, agents will eat 5% and the state you are in will take another ~3%. Other closing costs, the expense and the hassle to spruce up the house for sale. Round it off to a 10% haircut of the selling price. 3. If you're single the first $250K of capital gains on your primary residence is exempt from federal income tax. Beyond that the IRS will take its cut. Include the Net Investment Income Tax (NIIT) and you're looking at 24% tax on any capital gains, assuming you will be in a high tax bracket when you sell. And depending upon the state you live in, there will be capital gains taxes paid to the state. Now look around you at the prices of groceries and meals. I have seen these costs roughly double in the last 8 years. So it's not just that your house has appreciated in value -- it's more that the value of the dollar has gone down. And the plumbers and electricians and construction workers needed to build a new house have also gotten more expensive. By buying real estate you have managed to preserve your buying power somewhat so it's not eaten up by inflation. You're not as rich as you think, but at least you're better off than the intern and your younger siblings. (edit: formatting)
refurb 3y ago
Guilt? Then when you’re ready to sell don’t charge market rate, sell for what you bought it for plus some modest gain. Would that alleviate your guilt?
steve_adams_86 3y ago
That 10% appreciate without me setting foot in it over around 18 months. I bought an imaginary home and it was just completed as of the 28th of September. I’m sure that rate of increase won’t continue, but yeah, the builds in the same area are now selling for a bit over 10% more.

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?
  - mbauman 3y ago
    Baloney. You have a house with relatively stable monthly payments. You will be able to purchase another hour if and when you need to move. You have a nest egg. It doesn’t matter when you sell because now you’re floating on the water. As the tide rises, so do you.
    - kelnos 3y ago
      The problem is that in California, the owner is still paying taxes on an assessed value only a little bit higher than what they paid for it initially. If they sell that house, and then buy something new at a similar market rate, their property taxes will balloon overnight, because the assessments "reset" to the purchase price when the property changes hands. The only way this works out great is if, after selling this house, they move to a new area (possibly new state) with lower cost-of-living, and possibly a more sane property tax regime. (Not sure the person way upthread is in California, but someone lower down mentioned Prop 13, so I thought I'd bring this up.)
      - Guvante 3y ago
        1% property taxes are ~15% of my mortgage payment in CA. I would pay 50% more if I upgraded with the same debt amount due to interest.
    - jjav 3y ago
      > You will be able to purchase another hour if and when you need to move. Say you bougt a house for 200K many years ago. Your neighbor bought the slightly larger house next door for 275K back then. Your house is worth 1M now. Can you move? Sure, you can sell your house at a nice profit (and pay taxes on that!!). The neighbors house is worth maybe 1.2M now. So you can't really afford to move. Housing gains on paper are not income and you can't cash in on it unless you move out to a much cheaper area. Otherwise whatever gains you had on paper also apply to the nearby houses, so you can't afford them.
      - mbauman 3y ago
eru 3y ago
Opportunity costs are real.
- thghtihadanacct 3y ago
  So is gravity and rainbows. You just gotta get what you can
thghtihadanacct 3y ago
and taxes ... while prop 13 keeps property taxes reasonably down for legacy home owners there is nothing blocking capital gains
- lotsofpulp 3y ago
  Prop 13 is only in California, and previous poster was talking about sub $350k houses, which makes it very, very unlikely they are in California.
  - thghtihadanacct 3y ago
    Fair enough but same idea. Any appreciation on a home you live in is moot. Its a house, its a home ... its not an investment. Anyone that leverages their home is an idiot. ... and capital gains applies anywhere but i guess if they are selling a house not in cali there might not be enough gains to worry about the IRS.
    - eru 3y ago
      Leveraging homes is almost universal when acquiring property: that's exactly what a mortgage is. Why do you call everyone who has a mortgage an idiot? Capital gains don't necessarily apply everywhere. In eg Australia your owner occupied house is exempt. And in eg Singapore we don't have capital gains on any asset at all. A house is both a home and an investment for most people. That's just a description of what's happening. However you could say that a house _should_ not be an investment.
      - thghtihadanacct 3y ago
        Australia?!? Who gives an f about australia or singapore? What youre saying is your arguments have no merit against mine... Cuz mine operate for the place I live in. I understand your gross under generalization ... but if you are living in a house its only worth is a roof over your head.
        3y ago
landryraccoon 3y ago
If your phone and your laptop were suddenly worth twice as much would you also be celebrating? I am struggling to find the right words to express how wrong your view is to me. Housing is a basic human need like food and clothing. How can you in good conscience celebrate making a tremendous profits exploiting the fact that people cannot afford a basic need?
- claytongulick 3y ago
  > How can you in good conscience celebrate making a tremendous profits exploiting the fact that people cannot afford a basic need? I'm completely missing your point. If I buy property in a developing area because I think it's cool, and I live there for years and am part of the community and watch it grow around me, and years later decide to sell - I took an early risk, don't I deserve to recognize the rewards from that risk? If it was a bad risk and the area went to hell, and I lost money - is that ok? But making money isn't? Should home builders not be allowed to make money because housing is a basic human need? Should we not be allowed to build luxury homes that cost more because we could have built multiple cheaper ones with the same money? What should the rules be, in your opinion?
  - satvikpendem 3y ago
    Singapore has a good model that allows most of its citizenry to own homes. Basically, it competes with home builders directly. If they don't want to build, the government will do so. https://youtu.be/3dBaEo4QplQ?si=r_3FWkZJLBvWAxJ_ https://youtu.be/3dBaEo4QplQ?si=r_3FWkZJLBvWAxJ_
    - mixmastamyk 3y ago
      Oh, folks want to build, that’s for sure. They’ve been prevented, and sometimes still are.
      - satvikpendem 3y ago
        In Singapore, the state has vast eminent domain powers and is exempt from all zoning laws, which is covered in the video. I'm not sure that would ever fly in the US.
kelnos 3y ago
That "wealth created by the community" is often really "there is high housing demand, but the community of housing owners refuse to allow reasonable increases in density, which has the effect of increasing their home values". When the people who "generate wealth" are doing so by dictating prices, that seems a bit sketchy to me. The ironic thing is that housing scarcity often ends up making a place much less desirable -- even for the entrenched homeowners who cause the scarcity problem.
rcpt 3y ago
> it's come from no one's pockets until you sell Assuming that property tax has been tracking the current market value of the house then yes. But in California prop 13 means that isn't the case
benjaminwootton 3y ago
The more important point is that you will take that extra money and more and give it to the next willing seller who you are buying from. Rising property prices don’t do much for you at all until you are ready to trade down or leave the market.
AnthonyMouse 3y ago
> 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. It comes from their pockets when they pay rent. Meanwhile you, as a property owner, receive thousands of dollars a month in imputed rent by owning a place to live. You also have the ability to spend the money without selling the property by borrowing against the equity, as many people do. > Second of all, when you do sell it, the money will come from the pockets of your willing buyer People "willingly" subscribe to Comcast. Not because they prefer doing business with Comcast or believe themselves to be getting a fair deal. > if you still want to feel bad about something, let it be this: The people celebrating the increase in housing costs because they own housing should feel bad about it. Especially the ones who caused it by lobbying for zoning restrictions. > But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!) This doesn't actually fix housing shortages created by restrictive zoning -- which you could conceivably still have with a land value tax and a government that keeps the restrictive zoning to maximize land values and therefore tax revenue. (Land is worth a lot more if you need it proportionally to build housing instead of just buying one piece of land to build an arbitrarily large amount of housing by building an arbitrarily tall building.)

smeej 3y ago

Take out a HELOC at the now-current interest rates and give the money to your affected friends to pay them back. You'll probably have to sign a letter saying it's a gift, not a loan, if they want to use the money toward a down payment, but if you sincerely feel like you have taken money from their pockets, this is a way you can give it back.

nicup12345689 3y ago
I think he's just doing this ritual cleanse of: I feel bad then I can feel good. It's all happening in his head, meanwhile out there, nothing changed.
- smeej 3y ago
  I do too. The subtext of this is definitely, "Oh really? Let's see you put your money where your mouth is."
jwestbury 3y ago
Not GP here, but speaking for myself: I bought a house at low interest rates, using tech wages that aren't commensurate at all to the standard wages in my hometown where I bought the house. What I'm doing now is renting out that house at less than my mortgage whilst living in a different country with higher taxes and which generally takes better care of its people (the blight that is the Tories notwithstanding). That said, you can't expect people not to play the game if they're forced to play the game. Those of us in the western world pretty much all live in capitalist countries; the best we can do is ensure that we're doing well in our own lives whilst trying to fix the game for those who aren't doing so well. Taking out a HELOC and giving the money to friends is a substantial financial risk that jeopardises our own comfort without having a clear positive impact on those friends and without really fixing the underlying problem. It's like giving cash to a homeless person instead of giving them housing and support -- the cash will be gone soon, and the system that resulted in their homelessness won't be fixed, nor will you have prevented any future homelessness. tl;dr, you can own a house and live comfortably whilst still lamenting the fact that your friends can't, and this isn't an inherently hypocritical stance. You're just lamenting the fact that the game you're playing necessarily has winners and losers, and wishing that would change.

chasebank 3y ago

Perhaps it’s just rapid inflation, goods and services have yet to catch up? Only time will tell. $100 today is most definitely not $100 from 8 years ago.

landryraccoon 3y ago

I agree, and I’m profoundly disappointed that people are celebrating the infliction of such misery on a younger generation. If the food in your fridge or the clothes in your closet were suddenly drastically more expensive and you could make a profit selling them, would that be a good sign for your society and community? Would you view it as a sign of prosperity that your well stocked pantry was now a source of funds you can tap by selling to starving people? Housing is a basic human need and it’s all but unaffordable. Even if you personally profit surely you can see that this is corrosive to society as a whole.

RHSeeger 3y ago

> 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. You bought a house and you live in it. Feeling guilt over something that isn't your fault makes no sense. If it makes you feel _better_ to try to help solve the problem, that's great; but that's totally different than guilt. Just like it's not right to feel bad that you can't keep up with the Joneses, its not right to feel guilty that the Smiths can't keep up with you.

putlake 3y ago

It's true that the last 15 years have been a fantastic time to buy a house. And yes, you are better off compared to those who didn't do that because they were too young or didn't have the money. But don't ever feel bad about this because you're basically treading water with inflation: 1. Through the years you own your home, you will pay roughly 1% of the notional value of the property in state and local property taxes EACH YEAR. You already know this. 2. When you sell your house, agents will eat 5% and the state you are in will take another ~3%. Other closing costs, the expense and the hassle to spruce up the house for sale. Round it off to a 10% haircut of the selling price. 3. If you're single the first $250K of capital gains on your primary residence is exempt from federal income tax. Beyond that the IRS will take its cut. Include the Net Investment Income Tax (NIIT) and you're looking at 24% tax on any capital gains, assuming you will be in a high tax bracket when you sell. And depending upon the state you live in, there will be capital gains taxes paid to the state. Now look around you at the prices of groceries and meals. I have seen these costs roughly double in the last 8 years. So it's not just that your house has appreciated in value -- it's more that the value of the dollar has gone down. And the plumbers and electricians and construction workers needed to build a new house have also gotten more expensive. By buying real estate you have managed to preserve your buying power somewhat so it's not eaten up by inflation. You're not as rich as you think, but at least you're better off than the intern and your younger siblings. (edit: formatting)

refurb 3y ago

Guilt? Then when you’re ready to sell don’t charge market rate, sell for what you bought it for plus some modest gain. Would that alleviate your guilt?

steve_adams_86 3y ago

That 10% appreciate without me setting foot in it over around 18 months. I bought an imaginary home and it was just completed as of the 28th of September. I’m sure that rate of increase won’t continue, but yeah, the builds in the same area are now selling for a bit over 10% more.