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Your parents bought their house for $10K in the 70s. In 2007 it was worth $400K, now it's worth $200K - your parents have just lost $200,000 !
by excuse-me 14y ago
Your parents bought their house for $10K in the 70s.
In 2007 it was worth $400K, now it's worth $200K - your parents have just lost $200,000 !
- ams6110 14y agoYeah because they refinanced 4 times and pulled all the equity out to buy new cars, boats, RVs, and vacations.
- excuse-me 14y agoyes - there is that ;-)
- mattm 14y agoI don't think houses were as little as $10k in the 70s. Maybe for grandparents, not parents. I hate it how people use absolute numbers when comparing house values now to the past as it completely distorts the changes. For example, a house worth $40k in 1970 and $300k today sounds like a good return, right? However, that would not even be a 5% "ROI" compounded over that period. When you take into account maintenance, property taxes and other home ownership costs, it's probably not even above the inflation rate. Yet, when you look at the numbers on paper and see a nearly 8x increase, many people think "Wow, what a great investment."
- excuse-me 14y agoThe point was that the 'loss' was in the value of a house they weren't going to sell. It's like scratching off the numbers on a lottery ticket and saying you lost $1M for each one that doesn't match
- GBond 14y agoI would argue the expectation of a home to give "a good return" is the core of the problem.