3 ms·

In the USA there is a lack of inventory due to those people who locked in 30 year fixed rates in the 2-3% range. Those folk might want to move but they're not m

In the USA there is a lack of inventory due to those people who locked in 30 year fixed rates in the 2-3% range. Those folk might want to move but they're not moving when rates are currently 7%+. The supply won't improve until rates come under 5%.

alistairSH 2y ago
Presumably, this will eventually even out as people have to move for one reason or another and 7% mortgages become more normal (and historically, they aren't unusual). But, yeah, right now, the number of people I know who have paused plans to move? A lot. Both within the area and others who were contemplating relocation. We were considering a move to a smaller city, but prices there have gone up just as fast as our current area (DC metro). Along with the interest increases, it's not viable any more (would require wife to find new employment, probably at the lower prevailing wage for that area).
HarHarVeryFunny 2y ago
It also doesn't help that there are now taxes to pay on house appreciation whenever you sell, so you can't sell and take the proceeds to buy elsewhere since the taxman will take a large chunk of it. It used to be that if you sold one house and bought another for same price then there would be no appreciation taxes, but that stopped a few(?) years ago. Until something changes, many people are stuck in their homes, unless they are willing to accept the huge downgrade in what they can afford if they moved.
- sys_64738 2y ago
  You can still build 500k$ of equity for a married couple in the USA.
- ryandrake 2y ago
  > It used to be that if you sold one house and bought another for same price then there would be no appreciation taxes, but that stopped a few(?) years ago. The IRS's 121 Home Sale Exclusion still applies which allows you to exclude $250,000 ($500,000 if married) of capital gains on the sale of your primary residence. For an investment property, you can also do a like-kind exchange to defer taxes.
  - bombcar 2y ago
    If you really need to, there is a tricky path via that to avoid some tax. You convert the current appreciated house into a rental (this is a non-taxable event). You rent for whatever the required timeline is, and then 1031 exchange it to a more manageable rental in the area you desire (going from overvalued house in the Bay Area to triple-net commercial elsewhere, for example). Then you die and pass it on to heirs.
- khuey 2y ago
  > It used to be that if you sold one house and bought another for same price then there would be no appreciation taxes, but that stopped a few(?) years ago. If you're referring to Section 1031 exchanges in the US, that never applied to houses you actually live in, only investment properties (and it still does).
- deleted 2y ago
  [deleted]
- dbjacobs 2y ago
  > It used to be that if you sold one house and bought another for same price then there would be no appreciation taxes, but that stopped a few(?) years ago. In the US from 1964 to 1997 you could upgrade your home (i.e., buy one equal or more expensive) and avoid capital gains taxes and after age 55, you could downsize once and not pay capital gains taxes. From 1997, we've had the current regime of $250K/single, $500K/couple exclusion if you lived there 2 of the previous 5 years from the sale.

alistairSH 2y ago

Presumably, this will eventually even out as people have to move for one reason or another and 7% mortgages become more normal (and historically, they aren't unusual). But, yeah, right now, the number of people I know who have paused plans to move? A lot. Both within the area and others who were contemplating relocation. We were considering a move to a smaller city, but prices there have gone up just as fast as our current area (DC metro). Along with the interest increases, it's not viable any more (would require wife to find new employment, probably at the lower prevailing wage for that area).

HarHarVeryFunny 2y ago

It also doesn't help that there are now taxes to pay on house appreciation whenever you sell, so you can't sell and take the proceeds to buy elsewhere since the taxman will take a large chunk of it. It used to be that if you sold one house and bought another for same price then there would be no appreciation taxes, but that stopped a few(?) years ago. Until something changes, many people are stuck in their homes, unless they are willing to accept the huge downgrade in what they can afford if they moved.

sys_64738 2y ago
You can still build 500k$ of equity for a married couple in the USA.
ryandrake 2y ago
> It used to be that if you sold one house and bought another for same price then there would be no appreciation taxes, but that stopped a few(?) years ago. The IRS's 121 Home Sale Exclusion still applies which allows you to exclude $250,000 ($500,000 if married) of capital gains on the sale of your primary residence. For an investment property, you can also do a like-kind exchange to defer taxes.
- bombcar 2y ago
  If you really need to, there is a tricky path via that to avoid some tax. You convert the current appreciated house into a rental (this is a non-taxable event). You rent for whatever the required timeline is, and then 1031 exchange it to a more manageable rental in the area you desire (going from overvalued house in the Bay Area to triple-net commercial elsewhere, for example). Then you die and pass it on to heirs.
khuey 2y ago
> It used to be that if you sold one house and bought another for same price then there would be no appreciation taxes, but that stopped a few(?) years ago. If you're referring to Section 1031 exchanges in the US, that never applied to houses you actually live in, only investment properties (and it still does).
deleted 2y ago
[deleted]
dbjacobs 2y ago
> It used to be that if you sold one house and bought another for same price then there would be no appreciation taxes, but that stopped a few(?) years ago. In the US from 1964 to 1997 you could upgrade your home (i.e., buy one equal or more expensive) and avoid capital gains taxes and after age 55, you could downsize once and not pay capital gains taxes. From 1997, we've had the current regime of $250K/single, $500K/couple exclusion if you lived there 2 of the previous 5 years from the sale.