Do you care about your home appreciating?

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sf_tech_saver
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Re: Do you care about your home appreciating?

Post by sf_tech_saver » Tue Jul 16, 2019 10:48 pm

Yes -- but primarily to validate our decision to buy vs. rent.

Buying was a way of making a variable expense fixed--just like bonds in an AA that's how I sleep better at night.
VTI is a modern marvel

wordsmith11
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Re: Do you care about your home appreciating?

Post by wordsmith11 » Tue Jul 16, 2019 10:54 pm

Smoke wrote:
Tue Jul 16, 2019 5:15 pm
No, I never have thought of my home as an investment.
To me it is of no matter if the value goes up or down.
Can I take it off your hands for 25% of what you paid for it?

Smoke
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Re: Do you care about your home appreciating?

Post by Smoke » Tue Jul 16, 2019 11:07 pm

wordsmith11 wrote:
Tue Jul 16, 2019 10:54 pm
Smoke wrote:
Tue Jul 16, 2019 5:15 pm
No, I never have thought of my home as an investment.
To me it is of no matter if the value goes up or down.
Can I take it off your hands for 25% of what you paid for it?
I appreciate the offer, however it's not for sale :wink:
Arguing for the sake of arguing is something I am not going to engage in.

randomguy
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Re: Do you care about your home appreciating?

Post by randomguy » Tue Jul 16, 2019 11:25 pm

rascott wrote:
Tue Jul 16, 2019 10:20 pm
I'm on my 4th house.....I bought my first house with zero down and rolled the (tax free) equity into each subsequent purchase. My current long-term home I had $150k down payment when bought 3 years ago. None of that money came from my pocket (other than mortgage payments, which were less than rents on comparable homes). We may move again in 7-10 years and would likely have an extra $100k+ even if it didn't appreciate a single dollar from now until then.

My current mortgage payment is roughly double what it was for my first home.... even though the value is 4x.


So yeah, homes appreciating are a good thing. These were all homes in the same metro area.
If house prices had stayed the same and you invested those double mortgage payments would you have more or less money? It is easy to look at just one part of the equation (increases in equity) but you also have to look at the costs (higher taxes, higher mortgage payments, and the opportunity cost of tying up that money) also.

KyleAAA
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Re: Do you care about your home appreciating?

Post by KyleAAA » Tue Jul 16, 2019 11:51 pm

grabiner wrote:
Tue Jul 16, 2019 8:29 pm
KyleAAA wrote:
Tue Jul 16, 2019 4:38 pm
Unless you are sure it is your forever home, then yes. Sure, your next home will also be more expensive but your equity will increase many times faster due to leverage, so you still come out well ahead.
The equity increases at the rate of your home value, regardless of your mortgage. If you own a $400K home and housing prices rise by 25%, your net worth increases by $100K. This might be a 25% increase if you have no mortgage and no investments, or 10% if you have no mortgage and $600K of investments, or a 100% increase if you have a $300K mortgage and no investments. But in any case, if you sell this home and buy an equally expensive home, your net worth won't change.

While appreciation does not help your net worth, it may help you upsize by increasing your available equity. If you own a $400K home with a $300K mortgage, you have $100K in equity less $40K in closing costs which you can tap by selling (or, if necessary, with a bridge loan), so you only have $60K plus any future savings to put down on your next home. If the home appreciates to $500K, you have $200K in equity less $50K in closing costs, so you have $150K plus any savings to put down on your next home. (This does not increase your net worth, though; the replacement home will come with a larger mortgage, leaving you less money to invest.)
Why would you assume one would buy an equally expensive home? The increase in equity is a bird in the hand. That one may or may not choose to turn around and buy an equally more expensive home is irrelevant. Most people eventually downsize.

EddyB
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Re: Do you care about your home appreciating?

Post by EddyB » Tue Jul 16, 2019 11:55 pm

willthrill81 wrote:
Tue Jul 16, 2019 10:02 pm
ResearchMed wrote:
Tue Jul 16, 2019 5:29 pm
We don't think the surprisingly high appreciation shown on Zillow is in any way realistic.
It's pretty accurate in our area.

We too care about our home appreciating. On one hand, it means that our property tax bill goes up.
Isn’t it relative appreciation (within the applicable tax base), not absolute appreciation, that influences your taxes? My city and county budgets (which go up—and one time, down!—on the basis of other factors) are basically spread across the assessed value of the tax base.

CurlyDave
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Re: Do you care about your home appreciating?

Post by CurlyDave » Wed Jul 17, 2019 12:11 am

dred pirate wrote:
Tue Jul 16, 2019 4:53 pm
KyleAAA wrote:
Tue Jul 16, 2019 4:38 pm
Unless you are sure it is your forever home, then yes. Sure, your next home will also be more expensive but your equity will increase many times faster due to leverage, so you still come out well ahead.
but will it? lets say I purchase a home for 200k now., I put down 20% (40k). Home goes up in value 50% - now worth 300k, I have 140k in equity when I sell in 5 years. (for the purposes of this what I pay down the mortgage is negligible.)

I move into a bigger/better home. The value of the home was 400k when I purchased the first home. It now goes up at the same rate. Value is now 600k. I take my 140k equity and use it as a down payment. So I have 140k in equity and a mortgage for 460k.

IF the value had a 0% increase for both homes- when I sold the cheaper home - I had 40k in equity from the sale. Put it towards the 400k home - I now have 40k equity but a mortgage of 360k. My net worth stays the same, but I have a lower mortgage, therefore have to pay more each month in expenses and will take me longer to pay off the mortgage Aren't I better off with a 0% increase? My logic could easily be flawed?
The part I think you are missing is that home price increases in an area put upward pressure on salaries.

There will be no new employees if buying a home is forever out of reach.

rascott
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Re: Do you care about your home appreciating?

Post by rascott » Wed Jul 17, 2019 5:57 am

randomguy wrote:
Tue Jul 16, 2019 11:25 pm
rascott wrote:
Tue Jul 16, 2019 10:20 pm
I'm on my 4th house.....I bought my first house with zero down and rolled the (tax free) equity into each subsequent purchase. My current long-term home I had $150k down payment when bought 3 years ago. None of that money came from my pocket (other than mortgage payments, which were less than rents on comparable homes). We may move again in 7-10 years and would likely have an extra $100k+ even if it didn't appreciate a single dollar from now until then.

My current mortgage payment is roughly double what it was for my first home.... even though the value is 4x.


So yeah, homes appreciating are a good thing. These were all homes in the same metro area.
If house prices had stayed the same and you invested those double mortgage payments would you have more or less money? It is easy to look at just one part of the equation (increases in equity) but you also have to look at the costs (higher taxes, higher mortgage payments, and the opportunity cost of tying up that money) also.


Housing is a consumption item, as well. How would one invest the mortgage payments? Be homeless? I didn't have double mortgage payments. I said my current mortgage payment is roughly 2x what my payment was on my very first home.....though the value is 4x. Part of that is lower rates. Part came from mortgage payments paying down principal. Most came from appreciation.

22twain
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Re: Do you care about your home appreciating?

Post by 22twain » Wed Jul 17, 2019 6:12 am

No, we've thought very little about whether our house has appreciated or is appreciating.

When we bought it > 30 years ago, we had long-term stable jobs (academia with tenure or very good prospects of it). It suited our needs then, and still suits them. We've never needed to move, nor had the urge to move to "upgrade." It's more or less kept up with inflation, but that's all (LCOL area). Now that it's paid off, it makes up only about 5% our net worth. If/when we sell it, it will have only a minor effect on our finances.
My investing princiPLEs do not include absolutely preserving princiPAL.

renue74
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Re: Do you care about your home appreciating?

Post by renue74 » Wed Jul 17, 2019 6:58 am

We live near Charlotte, NC. Even though compared to the rest of the country, the CLT market is not super hot, there are pockets of bedroom communities of CLT that have blown up. Will it continue, I don't think so. In 2019, the market has slightly softened.

Just south of CLT, there was a small town that experienced exponential growth over the last 10 years....like doubled their population...with mostly new housing stock. Last year, the city put an $18,000 impact fee on all new home building permits. That's right....a builder goes into the office to pull a permit and they drop $18K on impact fees. It's designed to do two things....increase the coffers for infrastructure projects. Right now you drive down the street at 10am on Tuesday and you hit traffic jams.....and it's also designed to curb growth by slowing new housing starts.

5 years ago, you could buy an old bungalow type house in that town for $100K. Now, the rate is $150K. So the barrier for entry into homeownership when up $50K....for a basic house in 5 years.

Personally....we've lived in the same house since 2002. I plan to sell in 4 years when my 14 year old goes to college. As long as the market is similar to today, I'm fine.

Now...I also own 10 rental houses and in 10 years, I plan to start liquidating them. These houses, I bought all in the $40K to $80K range. I'm hoping to sell all of them in the $120K to $150K range.

mancich
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Re: Do you care about your home appreciating?

Post by mancich » Wed Jul 17, 2019 7:03 am

bubbadog wrote:
Tue Jul 16, 2019 4:43 pm
I care about all of my assets appreciating, including my home.
+1 Of course I like to see the value of my house rise, along with my mutual funds, 401k, etc

mancich
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Re: Do you care about your home appreciating?

Post by mancich » Wed Jul 17, 2019 7:03 am

bubbadog wrote:
Tue Jul 16, 2019 4:43 pm
I care about all of my assets appreciating, including my home.
+1 Of course I like to see the value of my house rise, along with my mutual funds, 401k, etc

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Blues
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Re: Do you care about your home appreciating?

Post by Blues » Wed Jul 17, 2019 7:27 am

Not concerned about it one way or the other...up, down or steady.
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asif408
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Re: Do you care about your home appreciating?

Post by asif408 » Wed Jul 17, 2019 7:59 am

I don't because I don't consider my home an investment. Overall, though, I see it as a negative If it does appreciate (which it has in the last few years), because my property taxes increase (which they have), and as the property ages, my homeowner's insurance increases as well (new home is cheaper to insure, I've learned).

Why would I root to pay more ever year in insurance and taxes for something I own that I'm not planning to sell anytime soon, if ever?

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Cycle
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Re: Do you care about your home appreciating?

Post by Cycle » Wed Jul 17, 2019 8:13 am

Yes, I care about appreciation, hoping it stays flat. I would prefer to keep my housing expenses low.
Appreciating home prices above the historical average (inflation), will increase your costs next time u make a real estate transaction.

Many baby boomers and previous generations wanted to lock in their housing costs so they screwed up many cities with shortsighted zoning and property tax laws. This has created the unlivable car-dependent cities of California with accompanying obesity and homeless issues.

If you want to create high appreciation, suppress supply. Incentivize people to not move by building highways that allow for longer commutes. Lock in their assessed value for property tax based on purchase price. Do not allow additional units to be built through restrictive zoning. Do not build public parks, creating a demand for personal parks (ie sfh with large lots).

In California, as people age they cannot afford the property tax if they move. they sit tight and have a bunch of empty bedrooms in their home that conflicts with their mobility needs. Perhaps they should be in a condo, but can't afford it.

Luckily I live in Minneapolis where we have somewhat high density zoning (no single family zoning), so when prices get to a certain point owners can then justify the investment to add a few units to their single family home, stabilizing market home prices. My neighborhood is still mostly single-family, and it will stay that way for a while unless rent rates increase. A turn-key sfh in my neighborhood is $325k, fixer uppers ~$200k.

Everything is very cheap in my neighborhood, entres at restaurants $9-14, $2 beers at the corner bar. This paired with a high income job creates an environment for prodigious wealth accumulation.
Never look back unless you are planning to go that way

cadreamer2015
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Re: Do you care about your home appreciating?

Post by cadreamer2015 » Wed Jul 17, 2019 8:42 am

Another wrinkle, probably only applicable in VHCOL areas or very expensive homes, is the $250/500 k exemption for capital gains for homeowners. If home price appreciation exceeds those current limits one might want to sell and move, even if just in the same town, to avoid having to pay capital gains taxes on a future sale. Of course this doesn't matter if one expects to never sell and get the capital gains step up on death.
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Carlos Danger
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Re: Do you care about your home appreciating?

Post by Carlos Danger » Wed Jul 17, 2019 8:50 am

No. We bought it to live in. We bought it for the fancy kitchen, the space for guests, the large yard, etc., etc. It's not an investment.

And, if plans change and we decide we want to move one day, appreciation might price out potential buyers. Houses in this range typically stay on the market for a year or two. We live in a rural county that is just barely the second poorest in the state and one of the poorest in the entire United States.

mak1277
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Re: Do you care about your home appreciating?

Post by mak1277 » Wed Jul 17, 2019 8:55 am

I would like my home to appreciate only because that will mean I will allow myself to buy a more expensive home when I move. For my next move, I'm hoping to buy a new house without any net cash outlay after selling my current house. I won't be upset if it doesn't appreciate but it would be nice if it did.

JackoC
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Re: Do you care about your home appreciating?

Post by JackoC » Wed Jul 17, 2019 9:13 am

EddyB wrote:
Tue Jul 16, 2019 11:55 pm
willthrill81 wrote:
Tue Jul 16, 2019 10:02 pm
ResearchMed wrote:
Tue Jul 16, 2019 5:29 pm
We don't think the surprisingly high appreciation shown on Zillow is in any way realistic.
It's pretty accurate in our area.

We too care about our home appreciating. On one hand, it means that our property tax bill goes up.
Isn’t it relative appreciation (within the applicable tax base), not absolute appreciation, that influences your taxes? My city and county budgets (which go up—and one time, down!—on the basis of other factors) are basically spread across the assessed value of the tax base.
Theoretically it would only be appreciation relative to your whole municipal tax base would affect your property taxes. In practice in our experience where we live, I think rapid appreciation has been a factor in property taxes going up faster in $'s than CPI. Although prop taxes as % of market value have gone down (I still have info from 1996 a few years after we bought: I estimate home value increase in that period ~5 times, prop taxes ~2.1 times, CPI ~1.6 times).

Among the reasons I believe are the fact that most voters in our city are not property owners. Some are renters whose rent might be indirectly affected by prop taxes but not necessarily fully and anyway they don't usually directly see it. And many are in publicly owned apartments not affected. Renters and municipal employees and their representatives IME tend to have the general opinion that prop value increases are a windfall that should be spread around beyond the property owners. Also new property owners are, obviously, willing to pay the new much higher prices of which prop taxes are an arguably reasonable % (now ~1.1% of market value for our house). Whereas we long time owners tend to just see it as a prop tax bill that's gone up faster than overall CPI.

But it's ridiculous IMO to say you don't want a home, which is in fact an investment though one complicated by a consumption component, to appreciate. If the location is a given, you absolutely want to live there not elsewhere, then the correct comparison is rent v buy in that location. If there's high appreciation buy beats rent, rent only beats buy with low or negative home price appreciation, typically. If instead you don't hold the location constant, then appreciation over and above other areas will allow you to buy an equivalent house in the another area and have money left over. Either way it's illogical to say you want your house to decrease in value or even don't care. That's not changed by the fact that *some* of your appreciation might be effectively lost to faster prop tax increases, or general cost increases. Like in our area restaurant types and prices are now closer to Manhattan (right across the river) levels than they were, as property prices have gotten closer. It's higher commercial rents plus new establishments catering to the clientele paying the new much higher home prices and high rise rentals. But we'd still be much worse off if we wanted to live here but hadn't bought, and likewise our house is now equivalent to much more house, or as much house and much more cash in L'er COL areas than it used to be. There's no way have we lost out on that price change, net.

jeroly
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Re: Do you care about your home appreciating?

Post by jeroly » Wed Jul 17, 2019 9:22 am

Even if you plan to never leave a home, price appreciation (or lack thereof) will impact your estate planning.

Let's say that you want to leave $1,000,000 to your grandkids/charities/etc. If your home is worth $1,000,000 after paying off the mortgage balance, you don't have to worry about holding on to other assets and your spend rate can be considerably higher (or you can become more conservative in your other investments) than it would be if you needed to keep $1,000,000 of retirement account balances aside for your estate.

Of course, if your retirement planning involves geographic arbitrage or downsizing, then you can extract the appreciation on your home sale and use it to fund your retirement.

Moreover, even if you plan to never leave the home, you could use the house equity to fund your retirement, via a reverse mortgage.

randomguy
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Re: Do you care about your home appreciating?

Post by randomguy » Wed Jul 17, 2019 9:44 am

rascott wrote:
Wed Jul 17, 2019 5:57 am
randomguy wrote:
Tue Jul 16, 2019 11:25 pm
rascott wrote:
Tue Jul 16, 2019 10:20 pm
I'm on my 4th house.....I bought my first house with zero down and rolled the (tax free) equity into each subsequent purchase. My current long-term home I had $150k down payment when bought 3 years ago. None of that money came from my pocket (other than mortgage payments, which were less than rents on comparable homes). We may move again in 7-10 years and would likely have an extra $100k+ even if it didn't appreciate a single dollar from now until then.

My current mortgage payment is roughly double what it was for my first home.... even though the value is 4x.


So yeah, homes appreciating are a good thing. These were all homes in the same metro area.
If house prices had stayed the same and you invested those double mortgage payments would you have more or less money? It is easy to look at just one part of the equation (increases in equity) but you also have to look at the costs (higher taxes, higher mortgage payments, and the opportunity cost of tying up that money) also.


Housing is a consumption item, as well. How would one invest the mortgage payments? Be homeless? I didn't have double mortgage payments. I said my current mortgage payment is roughly 2x what my payment was on my very first home.....though the value is 4x. Part of that is lower rates. Part came from mortgage payments paying down principal. Most came from appreciation.
And are you better off? If both house had appreciated 0% and you had invested all the money you would have saved from lower mortgage payments and taxes, would you have more or less money? I bet it is close. Depending on when you bought, the huge drop in interest rates covers a large amount of gains (20 years ago 100k of mortage was 650 bucks. At the bottom, it was about 400.). Through in 10+ years of principle payments and we are talking a lot of cash. Then a nice bull market and you can end up with a decent pile of cash.

rascott
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Re: Do you care about your home appreciating?

Post by rascott » Wed Jul 17, 2019 10:10 am

randomguy wrote:
Wed Jul 17, 2019 9:44 am
rascott wrote:
Wed Jul 17, 2019 5:57 am
randomguy wrote:
Tue Jul 16, 2019 11:25 pm
rascott wrote:
Tue Jul 16, 2019 10:20 pm
I'm on my 4th house.....I bought my first house with zero down and rolled the (tax free) equity into each subsequent purchase. My current long-term home I had $150k down payment when bought 3 years ago. None of that money came from my pocket (other than mortgage payments, which were less than rents on comparable homes). We may move again in 7-10 years and would likely have an extra $100k+ even if it didn't appreciate a single dollar from now until then.

My current mortgage payment is roughly double what it was for my first home.... even though the value is 4x.


So yeah, homes appreciating are a good thing. These were all homes in the same metro area.
If house prices had stayed the same and you invested those double mortgage payments would you have more or less money? It is easy to look at just one part of the equation (increases in equity) but you also have to look at the costs (higher taxes, higher mortgage payments, and the opportunity cost of tying up that money) also.


Housing is a consumption item, as well. How would one invest the mortgage payments? Be homeless? I didn't have double mortgage payments. I said my current mortgage payment is roughly 2x what my payment was on my very first home.....though the value is 4x. Part of that is lower rates. Part came from mortgage payments paying down principal. Most came from appreciation.
And are you better off? If both house had appreciated 0% and you had invested all the money you would have saved from lower mortgage payments and taxes, would you have more or less money? I bet it is close. Depending on when you bought, the huge drop in interest rates covers a large amount of gains (20 years ago 100k of mortage was 650 bucks. At the bottom, it was about 400.). Through in 10+ years of principle payments and we are talking a lot of cash. Then a nice bull market and you can end up with a decent pile of cash.


Well my homes didn't appreciate at the same level of every other home in the market. Particularly my last one that was in a very upward trending neighborhood, and went up over 30% in under 3 years. While the broader metro market was going up about 5-7% per yer. And certain other areas were totally flat.

You aren't buying a metro market index when buying a home. More like buying a single stock. This is normal everywhere.....so of course you want your home to appreciate....at least comparable to the broad market.


Not sure what you are saying about "saving all that money". My higher mortgage payment bought me a much larger/nicer home, compared with my first one (and 2nd, 3rd). So it's not an apples to apples comparison. I increased my consumption.
Last edited by rascott on Wed Jul 17, 2019 10:33 am, edited 1 time in total.

jebmke
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Re: Do you care about your home appreciating?

Post by jebmke » Wed Jul 17, 2019 10:14 am

I guess I care in a clinical sense. I know our current house is under water because we bought it in 2007. When I was working I always negotiated a 2-year "no loss" agreement with every move. Because values rarely dropped much for long back then I never had to invoke it.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Michael Patrick
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Re: Do you care about your home appreciating?

Post by Michael Patrick » Wed Jul 17, 2019 10:33 am

On the one hand, my house is an asset and I want assets to increase in value.

On the other hand, I had multiple reasons beyond its value as an investment for buying a house. A place to call my own, space for a garden to grow some of my own food, space for my kids to play, a space where I can crank up my guitar without neighbors on a floor above or below like in all the apartments I had lived in previously...

H-Town
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Re: Do you care about your home appreciating?

Post by H-Town » Wed Jul 17, 2019 10:42 am

dred pirate wrote:
Tue Jul 16, 2019 4:15 pm
So some of my friends and I were discussing this. This is more of a discussion, as it is not like we can really affect it. We live in a medium cost of living area (Raleigh-Durham area) that is having some pretty significant appreciation over the past couple of years. in my neighborhood I have seen about a 15-20% increase in the last two years for my home. So we were debating.
Friend 1 - He really wants to see our home price continue to go up - he is going to retire in a couple of years and move to an VERY low cost of living area - he will be able to pocket any of the increase and use it in retirement.
Friend 2 - Not moving any time soon - he could care less what happens, he plans on staying in their home 15+ years (sort of a "forever home") - so what happens doesn't really affect him
Me - I see myself moving (in the same city) in ~5 years to a nicer home. It is nice to see your home value rise, but any home we move into will also rise accordingly, so we will just have to pay move to upgrade. So I would rather just sort of see the values rise an the rate of inflation so as to not price myself out of the market.

Your thoughts? One thing I have going for me is that my place is right on the the edge of the "really expensive homes" - I have one of the lower cost homes in the immediate area, in a desirable, growing area, so I think it is reasonable that my home MIGHT go up a little more than the rest of the metro area. It is also nice to have some equity continue to be build up in-case there is bad luck for me and I have to move - more equity means I might be able to purchase a home for case in a low cost of living area,

so I did kind of ramble, but just curious with an intellectual discussion
In Texas, property tax is assessed based on the value of the house. So no thanks.

Also - there is no such thing as "forever home". It's a marketing term from HGTV to brainwash people into thinking a house can be a "forever home".

renue74
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Re: Do you care about your home appreciating?

Post by renue74 » Wed Jul 17, 2019 10:49 am

Cycle wrote:
Wed Jul 17, 2019 8:13 am


In California, as people age they cannot afford the property tax if they move. they sit tight and have a bunch of empty bedrooms in their home that conflicts with their mobility needs. Perhaps they should be in a condo, but can't afford it.

My step mom's mother just passed away about 2 years ago. She had owned a home in San Jose since the early 1960s. The appreciation was crazy. I think maybe they paid in the $70K range and the regular, plain house was worth about $1.4M.

She ended up keeping the house and she moved to her son's home for a few months until she passed away. Their plan was always to keep the house until she passed back of the step up basis. Which hurts the market because you have homes that could be used for younger families sitting vacant.

BTW, the sold it as quickly as they could.

mervinj7
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Re: Do you care about your home appreciating?

Post by mervinj7 » Wed Jul 17, 2019 11:10 am

H-Town wrote:
Wed Jul 17, 2019 10:42 am
In Texas, property tax is assessed based on the value of the house. So no thanks.

Also - there is no such thing as "forever home". It's a marketing term from HGTV to brainwash people into thinking a house can be a "forever home".
Interestingly, in CA property tax is assessed based on the initial purchase price, so that's not an issue. I absolutely agree there is no such thing as "forever home." My wife and I grew up 3000 miles from here, our parents grew 10,000 miles, and we ourselves have moved 4 times since coming to CA. Do I care about my home appreciating? Of course I do, it's an asset just like everything else in our portfolio that includes stock, bonds, rental properties, etc. And like any other asset, they will eventually be disposed of or passed on.

Nowizard
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Re: Do you care about your home appreciating?

Post by Nowizard » Wed Jul 17, 2019 11:28 am

Recently, we wanted to downsize and do it quickly. We would not have preferred it but chose to sell at less than we paid and to purchase at a price higher than listed in order to assure we got the house. So, back to hoping the current one will appreciate, but it is likely to be more of an issue for our children than us.

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SQRT
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Re: Do you care about your home appreciating?

Post by SQRT » Wed Jul 17, 2019 2:32 pm

I’m 69 years old, retired 13 years, own 4 personal use homes. I don’t expect any of them to appreciate and don’t care much if they do. Better to go up than down but in the overall scheme of things it doesn’t matter much.

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dred pirate
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Re: Do you care about your home appreciating?

Post by dred pirate » Wed Jul 17, 2019 3:16 pm

CurlyDave wrote:
Wed Jul 17, 2019 12:11 am
dred pirate wrote:
Tue Jul 16, 2019 4:53 pm
KyleAAA wrote:
Tue Jul 16, 2019 4:38 pm
Unless you are sure it is your forever home, then yes. Sure, your next home will also be more expensive but your equity will increase many times faster due to leverage, so you still come out well ahead.
but will it? lets say I purchase a home for 200k now., I put down 20% (40k). Home goes up in value 50% - now worth 300k, I have 140k in equity when I sell in 5 years. (for the purposes of this what I pay down the mortgage is negligible.)

I move into a bigger/better home. The value of the home was 400k when I purchased the first home. It now goes up at the same rate. Value is now 600k. I take my 140k equity and use it as a down payment. So I have 140k in equity and a mortgage for 460k.

IF the value had a 0% increase for both homes- when I sold the cheaper home - I had 40k in equity from the sale. Put it towards the 400k home - I now have 40k equity but a mortgage of 360k. My net worth stays the same, but I have a lower mortgage, therefore have to pay more each month in expenses and will take me longer to pay off the mortgage Aren't I better off with a 0% increase? My logic could easily be flawed?
The part I think you are missing is that home price increases in an area put upward pressure on salaries.

There will be no new employees if buying a home is forever out of reach.
in my profession there area million other pressures on salaries, home price is not one - salaries in my profession are stagnant at best, supply vs demand is killing

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dred pirate
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Re: Do you care about your home appreciating?

Post by dred pirate » Wed Jul 17, 2019 3:19 pm

interesting debate y'all - I am surprised at the number of responses - basically it boils down to - what is your plan in the future? and how do you view your home? (an investment or a place you lay your head)

MarkRoulo
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Re: Do you care about your home appreciating?

Post by MarkRoulo » Wed Jul 17, 2019 3:41 pm

Cycle wrote:
Wed Jul 17, 2019 8:13 am
In California, as people age they cannot afford the property tax if they move. they sit tight and have a bunch of empty bedrooms in their home that conflicts with their mobility needs. Perhaps they should be in a condo, but can't afford it.
FYI, California has something called the "Over 55 Base Year Value Transfer" that (with some limitations) lets folks age 55 or over move *once* within California to a new house worth no more than the current one and take the prop 13 limited assessment with them. So lots of folks *can* move to that condo without increasing their property tax.

Prop 13 does still create distortions in the market, but this specific one is sorta addressed.

nguy44
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Re: Do you care about your home appreciating?

Post by nguy44 » Wed Jul 17, 2019 4:02 pm

dred pirate wrote:
Wed Jul 17, 2019 3:19 pm
interesting debate y'all - I am surprised at the number of responses - basically it boils down to - what is your plan in the future? and how do you view your home? (an investment or a place you lay your head)
I agree, those are the main considerations.

We have been in our home almost 30 years. When we bought it, it was at the top of our "affordable" range. We bought it as the "if we never get the opportunity to move again, we will be happy with it" house. It was our third move in 7 years, and enough was enough.

I cared slightly about our home appreciating, but not to the point of viewing it as an investment. It was more to gauge the supply/demand cycle for homes in our area. I never included its appreciation in net worth calculations or for retirement planning.

Now that I am retired, we are just going to enjoy until either severe mobility issues surface and/or we decide to move to a LCOL area (relative to where we are now).

harvestbook
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Re: Do you care about your home appreciating?

Post by harvestbook » Wed Jul 17, 2019 4:06 pm

I'm not a maximalist, so for me a house is just a base of operations for my other investments, at lowest cost possible, and getting fringe benefits like a garden, firewood, open space, and, if needed in an emergency, a surface supply of fresh, clean water. Money not spent on housing can be invested, and buying and selling houses are a huge drag on time and money.
I'm not smart enough to know, and I can't afford to guess.

alfaspider
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Re: Do you care about your home appreciating?

Post by alfaspider » Wed Jul 17, 2019 4:09 pm

H-Town wrote:
Wed Jul 17, 2019 10:42 am
dred pirate wrote:
Tue Jul 16, 2019 4:15 pm
So some of my friends and I were discussing this. This is more of a discussion, as it is not like we can really affect it. We live in a medium cost of living area (Raleigh-Durham area) that is having some pretty significant appreciation over the past couple of years. in my neighborhood I have seen about a 15-20% increase in the last two years for my home. So we were debating.
Friend 1 - He really wants to see our home price continue to go up - he is going to retire in a couple of years and move to an VERY low cost of living area - he will be able to pocket any of the increase and use it in retirement.
Friend 2 - Not moving any time soon - he could care less what happens, he plans on staying in their home 15+ years (sort of a "forever home") - so what happens doesn't really affect him
Me - I see myself moving (in the same city) in ~5 years to a nicer home. It is nice to see your home value rise, but any home we move into will also rise accordingly, so we will just have to pay move to upgrade. So I would rather just sort of see the values rise an the rate of inflation so as to not price myself out of the market.

Your thoughts? One thing I have going for me is that my place is right on the the edge of the "really expensive homes" - I have one of the lower cost homes in the immediate area, in a desirable, growing area, so I think it is reasonable that my home MIGHT go up a little more than the rest of the metro area. It is also nice to have some equity continue to be build up in-case there is bad luck for me and I have to move - more equity means I might be able to purchase a home for case in a low cost of living area,

so I did kind of ramble, but just curious with an intellectual discussion
In Texas, property tax is assessed based on the value of the house. So no thanks.

Also - there is no such thing as "forever home". It's a marketing term from HGTV to brainwash people into thinking a house can be a "forever home".
Of course there is such thing as a "forever home." It's just that it's impossible to truly know in advance if a home will meet your needs for the rest of your life. But I don't think it's a meaningless term. When we bought our first house, we knew at the time it probably wouldn't meet our needs beyond a 10 year time horizon. It was on the small side and not zoned to the best schools (we were childless at the time). We are currently pending a purchase of a house for which could realistically be a "forever house" based on what I know now. Obviously, life could change, but we aren't buying it with the prior understanding that we will have to sell it sometime in the next decade.

That does make a difference with how we view home prices. I was excited for my property value increasing in our current home (which is for sale) because I knew there was a reasonable chance of monetizing that increase within the next few years. For the new house, I am going to be less excited, as it will simply mean a property tax increase. However, home equity can provide a certain amount of financial security.

H-Town
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Re: Do you care about your home appreciating?

Post by H-Town » Wed Jul 17, 2019 4:22 pm

alfaspider wrote:
Wed Jul 17, 2019 4:09 pm
H-Town wrote:
Wed Jul 17, 2019 10:42 am
In Texas, property tax is assessed based on the value of the house. So no thanks.

Also - there is no such thing as "forever home". It's a marketing term from HGTV to brainwash people into thinking a house can be a "forever home".
Of course there is such thing as a "forever home." It's just that it's impossible to truly know in advance if a home will meet your needs for the rest of your life. But I don't think it's a meaningless term. When we bought our first house, we knew at the time it probably wouldn't meet our needs beyond a 10 year time horizon. It was on the small side and not zoned to the best schools (we were childless at the time). We are currently pending a purchase of a house for which could realistically be a "forever house" based on what I know now. Obviously, life could change, but we aren't buying it with the prior understanding that we will have to sell it sometime in the next decade.

That does make a difference with how we view home prices. I was excited for my property value increasing in our current home (which is for sale) because I knew there was a reasonable chance of monetizing that increase within the next few years. For the new house, I am going to be less excited, as it will simply mean a property tax increase. However, home equity can provide a certain amount of financial security.
What if your children move out and you want to downsize? What if you travel and fall in love with a city and want to relocate? What if you receive a career changing opportunity to require to relocate? Since those factors are unknown, it cannot be determined that you buy a house and live in it until you kick the bucket. Hence, there's no such thing as a forever home. With this approach, you will be able to avoid buying more house than you need.

alfaspider
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Re: Do you care about your home appreciating?

Post by alfaspider » Wed Jul 17, 2019 4:28 pm

H-Town wrote:
Wed Jul 17, 2019 4:22 pm
alfaspider wrote:
Wed Jul 17, 2019 4:09 pm
H-Town wrote:
Wed Jul 17, 2019 10:42 am
In Texas, property tax is assessed based on the value of the house. So no thanks.

Also - there is no such thing as "forever home". It's a marketing term from HGTV to brainwash people into thinking a house can be a "forever home".
Of course there is such thing as a "forever home." It's just that it's impossible to truly know in advance if a home will meet your needs for the rest of your life. But I don't think it's a meaningless term. When we bought our first house, we knew at the time it probably wouldn't meet our needs beyond a 10 year time horizon. It was on the small side and not zoned to the best schools (we were childless at the time). We are currently pending a purchase of a house for which could realistically be a "forever house" based on what I know now. Obviously, life could change, but we aren't buying it with the prior understanding that we will have to sell it sometime in the next decade.

That does make a difference with how we view home prices. I was excited for my property value increasing in our current home (which is for sale) because I knew there was a reasonable chance of monetizing that increase within the next few years. For the new house, I am going to be less excited, as it will simply mean a property tax increase. However, home equity can provide a certain amount of financial security.
What if your children move out and you want to downsize? What if you travel and fall in love with a city and want to relocate? What if you receive a career changing opportunity to require to relocate? Since those factors are unknown, it cannot be determined that you buy a house and live in it until you kick the bucket. Hence, there's no such thing as a forever home. With this approach, you will be able to avoid buying more house than you need.
But I just said I knew things could change. A meteor could obliterate the earth and destroy all houses tomorrow.

What I'm saying is there nothing I know at this very moment that is likely to force a change. When I purchased my first house, I knew at the time of purchase it probably wouldn't meet my needs in 10 years. When buying a "forever house" it doesn't mean there is zero chance you will ever move, it just means a house that meets any future needs you can foresee today.

It's a separate conversation from "how much should I spend?" There are cheap forever houses and expensive "right now" houses, depending on your needs.

H-Town
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Re: Do you care about your home appreciating?

Post by H-Town » Wed Jul 17, 2019 4:32 pm

alfaspider wrote:
Wed Jul 17, 2019 4:28 pm
But I just said I knew things could change. A meteor could obliterate the earth and destroy all houses tomorrow.

What I'm saying is there nothing I know at this very moment that is likely to force a change. When I purchased my first house, I knew at the time of purchase it probably wouldn't meet my needs in 10 years. When buying a "forever house" it doesn't mean there is zero chance you will ever move, it just means a house that meets any future needs you can foresee today.

It's a separate conversation from "how much should I spend?" There are cheap forever houses and expensive "right now" houses, depending on your needs.
I see your point now and appreciate it. I just have a different view point. My wife and I like the idea of living in a city 5-10 years and then find a new adventure. So in our minds, a house is anything but permanent.

StealthRabbit
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Re: Do you care about your home appreciating?

Post by StealthRabbit » Wed Jul 17, 2019 4:40 pm

No. House is shelter, not investment.

My home is assessed 10x my cost basis. (Bad for me)

Taxes were <$3/ day. Now $46/day (bad for me)
I have known many seniors who have been displayed from "generations old" farms and homes.

Quite sad actually.
They (and I). Just wanted a place to lay out heads when we built these homes and farms shovel by shovel, and brick by brick. Takes 20 yrs to build orchards, barns, soils, grow wind breaks, groves.... Then the tax man nabs it. 3x in my short history. I'm too old to start over yet again.

Future value? My home is already designated to charity, so the much higher returns of an investment would have been far more value to them than my silly home.

prairieman
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Re: Do you care about your home appreciating?

Post by prairieman » Wed Jul 17, 2019 4:52 pm

The practical side of me says it does not matter to me as much as it will to my kids. We will stay here until we can’t because of death or health reasons. We own it outright and have enough to live on for life.
There is another side of me that, I almost hate to admit this, tracks my total asset value and likes to see it increase. That side likes to see it increase.

michaeljc70
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Re: Do you care about your home appreciating?

Post by michaeljc70 » Wed Jul 17, 2019 5:29 pm

bubbadog wrote:
Tue Jul 16, 2019 4:43 pm
I care about all of my assets appreciating, including my home.
+1. But the short/medium term timing of the appreciation isn't really important to me.

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Re: Do you care about your home appreciating?

Post by LadyGeek » Wed Jul 17, 2019 7:18 pm

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