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> 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 ju

> 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
        > Otherwise whatever gains you had on paper also apply to the nearby houses, so you can't afford them. Why are you so certain you couldn't you afford them? You were able to purchase a 200K house many years ago. Now you just need another 200K to buy that bigger house — and it's a bigger house! You did it once long ago, you can probably do it again even easier (in addition to everything else, you have a huge downpayment now). And no, you typically don't pay capital gains taxes against your primary residence. In any case, the point is that you're in a way better place than if you hadn't made that 200K purchase. That's what I mean by "floating on the water" — you have a stake in the market so now as it moves, so does your asset.
  - Guvante 3y ago
    California has a 1% tax rate. If you can't afford less than $1k per month you could just sell your $1 million house. Those numbers aren't being dramatic. You need a $1.2 million house to pay $1k a month in property taxes.
    - jjav 3y ago
      > California has a 1% tax rate. That is technically true, but not really true. The basic tax rate is indeed 1%, but counties and cities are free to add any kind of fees they want (AFAIK there is no limit) to your property tax so in practice you're paying way more than 1% in CA.
      - Guvante 3y ago
        Prop 13 says they can't do that. Only the county can charge 1%. Irvine CA wanted property tax and so they get builders to force you to an extra fee but it isn't technically a property tax. Not to say there isn't sometimes a fee or two added but it isn't the Wild West at all.
        jjav 3y ago
        > but it isn't technically a property tax That is the loophole they use. They add all kinds of fees into the property tax but don't classify them as taxes. Best I know, there is no limit to how many and how much. Twenty years ago my property tax was just a single line item, the property tax. Now it's up to 6-7 (don't have the bill in front of me to check exact count) line items. So yes, your CA propery tax^H^H^Hfee bill can be way over 1%
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.)

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
      > Otherwise whatever gains you had on paper also apply to the nearby houses, so you can't afford them. Why are you so certain you couldn't you afford them? You were able to purchase a 200K house many years ago. Now you just need another 200K to buy that bigger house — and it's a bigger house! You did it once long ago, you can probably do it again even easier (in addition to everything else, you have a huge downpayment now). And no, you typically don't pay capital gains taxes against your primary residence. In any case, the point is that you're in a way better place than if you hadn't made that 200K purchase. That's what I mean by "floating on the water" — you have a stake in the market so now as it moves, so does your asset.
- Guvante 3y ago
  California has a 1% tax rate. If you can't afford less than $1k per month you could just sell your $1 million house. Those numbers aren't being dramatic. You need a $1.2 million house to pay $1k a month in property taxes.
  - jjav 3y ago
    > California has a 1% tax rate. That is technically true, but not really true. The basic tax rate is indeed 1%, but counties and cities are free to add any kind of fees they want (AFAIK there is no limit) to your property tax so in practice you're paying way more than 1% in CA.
    - Guvante 3y ago
      Prop 13 says they can't do that. Only the county can charge 1%. Irvine CA wanted property tax and so they get builders to force you to an extra fee but it isn't technically a property tax. Not to say there isn't sometimes a fee or two added but it isn't the Wild West at all.
      - jjav 3y ago
        > but it isn't technically a property tax That is the loophole they use. They add all kinds of fees into the property tax but don't classify them as taxes. Best I know, there is no limit to how many and how much. Twenty years ago my property tax was just a single line item, the property tax. Now it's up to 6-7 (don't have the bill in front of me to check exact count) line items. So yes, your CA propery tax^H^H^Hfee bill can be way over 1%

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.)