5 ms·

> If your house loses half its value, that represents hundreds of thousands in losses. I never understood that part. Barring actual damage that would necessar

• fwip 3y ago
  Well, you don't always know if you're going to want to sell later. Maybe you lost your job, maybe you need to move to another city, maybe you just hate the neighborhood.
  • francisofascii 3y ago
    Right, all it takes is for the large local employer to suddenly downsize, causing both the loss of job, and the crash of the local housing market simultaneously.
    • roland35 3y ago
      Not just one employer, sometimes the entire industry goes down! Just look at the housing market in Detroit or Youngstown
    • llukas 3y ago
      Shouldn't this be priced into the house value in this local market?
      • bobthepanda 3y ago
        it usually isn't because banks are not all-seeing and cannot tell which local employer or industry is likelier to go bust. in that sense all metro areas are often equally risky.
• WalterBright 3y ago
  > it's still the same house What a house is worth is what someone else will pay you for it. There is no intrinsic worth to it.
  • Nevermark 3y ago
    That isn't true. The marketplace valuation is just where individual suppliers' and demanders' valuations cross. The individual valuations are the foundational reality, or the market wouldn't work. Every time you buy, sell, or decline to sell or buy something, you are operating based on your own valuation. So there is nothing theoretical about it.
    • WalterBright 3y ago
      > That isn't true. People find out it is true when they try to sell something. > If you wouldn't sell your house for $1M, then it is worth $1M to you If you're willing to pay $1M for it, then it's worth that to you.
      • Nevermark 3y ago
        >> If you wouldn't sell your house for $1M, then it is worth $1M to you (Sorry, deleted that phrase after getting distracted while making my comment. In my mind the edit was instant!) > What a house is worth is what someone else will pay you for it. There is no intrinsic worth to it. > People find out it is true when they try to sell something. Of course there is intrinsic value. A buyer has to pay you what you want for your house. You are setting the market price. If someone wants it, thats what they will need to give you. We often use the word “worth” to mean “what would be the best offer I might get. But you won’t sell it if it is “worth” more than that to you. Which “worth” is usually obvious from context. Valuations happen on both sides of every trade, and most often both participants end up with surplus value. The seller getting more than their minimum price, the buyer paying less than their maximum price. Even market makers commonly post prices with surplus relative to their neutral trade valuation, and typically move their price if their are no takers. They want a trade at X, but will try for as much surplus as they can before settling for X if they have to.
• Negitivefrags 3y ago
  You care if you have a mortgage and you live in a non-US country where interest rates can actually go up to price you out of it.
  • Tade0 3y ago
    You mean a situation where I could not afford the installments and therefore would be forced to sell it? In my corner of the world banks are required to assume a 2,5-5 percentage point buffer when calculating mortgage eligibility - the upper bracket is for variable interest rate mortgages. An unlikely scenario, but keeps the risk of what you mentioned low.