Do you care about your home appreciating?

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dred pirate
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Do you care about your home appreciating?

Post by dred pirate » 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

Sam1
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Re: Do you care about your home appreciating?

Post by Sam1 » Tue Jul 16, 2019 4:36 pm

My current home? No. I live here because the PITI is low and allows me to invest a lot.

If my primary “investment” was my home then yes, I’d be hoping for significant appreciation.

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Re: Do you care about your home appreciating?

Post by KyleAAA » 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.

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tennisplyr
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Re: Do you care about your home appreciating?

Post by tennisplyr » Tue Jul 16, 2019 4:42 pm

Not anymore, am retired in my late sixties. I had my good fortune over the past 35 years.
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Re: Do you care about your home appreciating?

Post by bubbadog » Tue Jul 16, 2019 4:43 pm

I care about all of my assets appreciating, including my home.

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ResearchMed
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Re: Do you care about your home appreciating?

Post by ResearchMed » Tue Jul 16, 2019 4:46 pm

Yup!

We don't think the surprisingly high appreciation shown on Zillow is in any way realistic.
But watching what other homes are selling for, vs. earlier prices, we figure there will be *some* noticeable "gain", mostly tax free.

That will, one way or another, help fund the approaching retirement.

RM
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Re: Do you care about your home appreciating?

Post by livesoft » Tue Jul 16, 2019 4:48 pm

We don't care. Home value from tax assessor has gone up, stayed flat, gone down. Its value has not kept up with inflation over the past 25 years.
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delamer
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Re: Do you care about your home appreciating?

Post by delamer » Tue Jul 16, 2019 4:51 pm

bubbadog wrote:
Tue Jul 16, 2019 4:43 pm
I care about all of my assets appreciating, including my home.
Seconding.

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

Post by dred pirate » 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?

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

Post by dred pirate » Tue Jul 16, 2019 4:54 pm

ResearchMed wrote:
Tue Jul 16, 2019 4:46 pm
Yup!

We don't think the surprisingly high appreciation shown on Zillow is in any way realistic.
But watching what other homes are selling for, vs. earlier prices, we figure there will be *some* noticeable "gain", mostly tax free.

That will, one way or another, help fund the approaching retirement.

RM
agree - I live in a townhome community - so very little fluctuation between homes - I see what my neighbor actually sold for

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unclescrooge
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Re: Do you care about your home appreciating?

Post by unclescrooge » Tue Jul 16, 2019 4:56 pm

If home prices continue to appreciate in SoCal, my kids won't afford to move out of the house.

Plus gardeners, cleaners, teachers, grocery clerks and music teachers will move elsewhere which would be detrimental to society.

As much as I love to have equity in my home, a huge crash wouldn't hurt either.

SovereignInvestor
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Re: Do you care about your home appreciating?

Post by SovereignInvestor » Tue Jul 16, 2019 4:59 pm

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?
Great example and that is sound logic.

I like appreciation, that way if I need to refinance there is equity for liquidity if needed.

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Re: Do you care about your home appreciating?

Post by KlangFool » Tue Jul 16, 2019 5:01 pm

OP,

1) If the house appreciates while you live there, you pay more property tax. It does not help you.

2) The only time that you make money from your house appreciation is when you sell.

3) The worst joke on the house owner is the house appreciate for 10+ years when the person lives there and then crashes when he is selling the house. It had happened to some of my peers.

KlangFool

zeal
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Re: Do you care about your home appreciating?

Post by zeal » Tue Jul 16, 2019 5:06 pm

Yes and no.

Yes, of course I want to see the value of my assets go up.

No, I don’t care enough to worry about it—the market will do what it’s gonna do. We hope to live the rest of our lives in this house, so the only thing appreciation matters to us for is net worth calculation and tax/insurance cost.

Jags4186
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Re: Do you care about your home appreciating?

Post by Jags4186 » Tue Jul 16, 2019 5:10 pm

KlangFool wrote:
Tue Jul 16, 2019 5:01 pm
1) If the house appreciates while you live there, you pay more property tax. It does not help you.
This really isn’t true. Property taxes are a function of the municipal budget. If the town needs $1,000,000/yr and there are 100 homes the average property taxes will be $10,000/yr. If the towns homes appreciate 20% YOY the town doesn’t all of sudden need 20% more money. Additionally home assessments usually are far removed from reality—until recently the home I live in was assessed for $68k. About 10 years ago it was adjusted to $300k. And when I purchased my home it was adjusted to $357k—more than $100k less than I paid. Regardless of the assessment property taxes have gone up on average 1-3% a year. Last year, our first year of the new higher $357k assessment our taxes went down $100yr. Of course if you do a huge addition your taxes will go up, but overall it’s relatively proportional.

To answer the OPs question YES I care about home appreciation. Not because I’m counting on it but because it is expensive to buy and sell a home.

Think about the costs associated with a real estate transaction:

Realtor commission: 6% of home sale price
Closing costs: Roughly 2% of home purchase price
Moving costs: minimum $1000 for a local move

And of course all of your optional costs which equal “making the place your own” which is the sky is the limit.

You want to hope you can recoup those costs if you ever sell. As a relatively young person I know my current home likely won’t be my last one so I’m hoping at a minimum to recoup these costs via appreciation. Of course I don’t really care about it the way I care about the stock market—I just hope when the time comes to move we have made back some or most of these fees.

On my final home I care less about appreciation.
Last edited by Jags4186 on Tue Jul 16, 2019 5:12 pm, edited 1 time in total.

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Re: Do you care about your home appreciating?

Post by Sandtrap » Tue Jul 16, 2019 5:11 pm

KlangFool wrote:
Tue Jul 16, 2019 5:01 pm
OP,

1) If the house appreciates while you live there, you pay more property tax. It does not help you.

2) The only time that you make money from your house appreciation is when you sell.

3) The worst joke on the house owner is the house appreciate for 10+ years when the person lives there and then crashes when he is selling the house. It had happened to some of my peers.

KlangFool
+1
And, if it is your retirement home, you are not selling it.

Do I "care" about the appreciative value of my home?
I'm aware that its value is about 3X what I paid, but beyond that. . . No.

Do I "care" about the appreciative value of R/E income property I own or buy?
Absolutely.

The first one is my "home".
The second one's are "investments".

j
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Smoke
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Re: Do you care about your home appreciating?

Post by Smoke » 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.
Arguing for the sake of arguing is something I am not going to engage in.

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Re: Do you care about your home appreciating?

Post by barnaclebob » Tue Jul 16, 2019 5:21 pm

It is possible for one price point of house to increase at a greater % than another price point. I think we benefited from this when upgrading in the Seattle area. In our northerly suburb, starter houses went from 300k to 500k, while houses in the 1mil range might have only gone up to 1.3 mil. Due to the population increase there were more people looking for starter homes than there were looking to upgrade.

In this case #3 could work out in your favor.
Last edited by barnaclebob on Tue Jul 16, 2019 5:28 pm, edited 1 time in total.

JackoC
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Re: Do you care about your home appreciating?

Post by JackoC » Tue Jul 16, 2019 5:26 pm

unclescrooge wrote:
Tue Jul 16, 2019 4:56 pm
If home prices continue to appreciate in SoCal, my kids won't afford to move out of the house.

Plus gardeners, cleaners, teachers, grocery clerks and music teachers will move elsewhere which would be detrimental to society.

As much as I love to have equity in my home, a huge crash wouldn't hurt either.
I don't have exactly the same view but I can see that general point. It's all a matter of your 'position' in the asset of homes in your area. As others said if planning to sell and move to a lower cost area of course you want current home to appreciate (more in $'s than homes in the future LC area). If you plan to buy a more expensive home in your own area you don't want prices to go up. If you plan to stay 'forever' it's more or less a wash from individual POV*. Further expanding your interest to kids who might want to live in the area or people you're not related to who want to buy in, again you're not going to be as in favor of appreciation. To some extent one could hedge the kid issue by doing some real estate investing in your area, if that's otherwise feasible, and not just own one home. That doesn't work as much though for a general concern about the impact of high home prices in a given area on everyone who might want to live there.

We live in an area that's had pretty extreme appreciation (inner NY area) last 20+ yrs. We have bought investment properties partly to hedge the future impact on kids. As far as everyone else, I see that as more zero sum. For everyone who was 'priced out' there's somebody who already owned who got more fuel to fund their retirement in lower cost areas. We know some of them, people not in good shape job/career wise in the second half of working life, but at least their little, not-in-great-shape brick row house is worth >$1mil. Also I guess further discussing the idea of 'social detriment' to letting home prices find their own level in a market (like we do stocks, for example) would turn political.

*re property taxes, my experience in an area where home values have increased 5+ times in the last 25 yrs is that in fact the municipal purse strings tend to loosen. In theory, or perhaps reality in towns where property taxpayers dominate the voting rolls, municipal costs are what they are and property tax % would just drop proportional to after inflation value increase. There's certainly no reason for the % of market to be a constant with a 5 fold increase in values, and it hasn't been here. But there's lot of non-property tax paying voters here and the tendency has been for absolute after inflation $ property taxes to increase. I can't prove that's 100% caused by hefty appreciation but I think it's a factor.

Broken Man 1999
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Re: Do you care about your home appreciating?

Post by Broken Man 1999 » Tue Jul 16, 2019 5:27 pm

I care, but I do not obsess.

Where I really care about appreciation is observing what is going on in our neighborhood.

I like our neighborhood a great deal. I have neighbors down a couple of doors from 30 years ago. Great place. Homes kept in good repair; lawns and landscaping kept trimmed, pleasing to the eye. Very shaded, nice for early morning or late afternoon walks/runs. Dogs are kept on leashes, owners take their dog poop bags along.

However, a neighborhood can turn on a dime, from great to OK to not so good to get out of here.

So I do keep an open eye on what is going on in terms of appreciation as homes are sold near us.

Broken Man 1999
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ResearchMed
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Re: Do you care about your home appreciating?

Post by ResearchMed » Tue Jul 16, 2019 5:29 pm

Yup!

We don't think the surprisingly high appreciation shown on Zillow is in any way realistic.
But watching what other homes are selling for, vs. earlier prices, we figure there will be *some* noticeable "gain", mostly tax free.

That will, one way or another, help fund the approaching retirement.

RM
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lostdog
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Re: Do you care about your home appreciating?

Post by lostdog » Tue Jul 16, 2019 5:34 pm

We're going to sell and rent at some point, so yes I care about the appreciation.

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Toons
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Re: Do you care about your home appreciating?

Post by Toons » Tue Jul 16, 2019 5:35 pm

Not Really
It is shelter.
:happy
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Re: Do you care about your home appreciating?

Post by sergio » Tue Jul 16, 2019 5:47 pm

I would be perfectly happy if I can sell it for what I paid + inflation. If my home appreciates, then the next home I buy will also likely have appreciated, making costs like realtor fees higher in absolute terms.

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Re: Do you care about your home appreciating?

Post by sergio » Tue Jul 16, 2019 5:55 pm

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?
I agree with this. I'd rather have a $400k house and $200k in liquid assets, than a $600k house.

Also, a couple other things. In the 50% increase case, your realtor fees will be $18k @ 6%. In the 0% increase case, they will be $12k, resulting in a $6k savings. It's also plausible that a $400k house may not appreciate 50% if that's at the high end of the local market.
Last edited by sergio on Tue Jul 16, 2019 5:57 pm, edited 2 times in total.

S&L1940
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Re: Do you care about your home appreciating?

Post by S&L1940 » Tue Jul 16, 2019 5:56 pm

retired, home paid for, we love the community, the friends we have here, the amenities
they are building here like it is 2005/06 again, smaller and more expensive
home is up to date, well kept, the kids may like living here or will get a fair price when we are gone, their choice
this is our home, an asset but not looked upon as an investment. we or the kids will do okay
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Rus In Urbe
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Re: Do you care about your home appreciating?

Post by Rus In Urbe » Tue Jul 16, 2019 6:00 pm

Smoke
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.
:thumbsup

Our home is about 7% of NW, so not a major factor.
We love it and DH calls it "our sailboat" (because of the money and care we lavish on it).
But it's not an investment.
I'd like to live as a poor man with lots of money. ~Pablo Picasso

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Re: Do you care about your home appreciating?

Post by Blake7 » Tue Jul 16, 2019 6:00 pm

We’ve been in our house that we purchased for about $530k for 13 years and it’s now paid off. We paid about $125k in mortgage interest total (less income tax deductions). Because we bought in 2006, our house is today worth slightly more than we paid for it (at the bottom of the market, it was worth about 40% less than what we paid). Whether we sell for more or less than we paid one day, will only be significant on the day we sell. I don’t dwell on home values in the interim that much. If we’d rented for the last 13 years where we live, we’d paid about $343k in rent over that time period. I know here are other cost/opportunity cost variables involved in the above. So I’ve always looked at the financial benefit, if any, of home ownership by comparing it to renting, with any home appreciation, if any, as icing on the cake. Am I looking at this wrong?

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Re: Do you care about your home appreciating?

Post by Nate79 » Tue Jul 16, 2019 6:05 pm

bubbadog wrote:
Tue Jul 16, 2019 4:43 pm
I care about all of my assets appreciating, including my home.
+1000

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Re: Do you care about your home appreciating?

Post by KyleAAA » Tue Jul 16, 2019 6:29 pm

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?
You have $100k more equity so you are better off. You could choose to rent instead, or buy a cheaper place, or move to a cheaper city. Either way, you have $100k more than you would have had otherwise.

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

Post by dred pirate » Tue Jul 16, 2019 6:36 pm

KyleAAA wrote:
Tue Jul 16, 2019 6:29 pm
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?
You have $100k more equity so you are better off. You could choose to rent instead, or buy a cheaper place, or move to a cheaper city. Either way, you have $100k more than you would have had otherwise.
I would disagree in my particular situation - my goal is to stay in the same city, but upgrade to a nicer home as my family grows -I have more equity, but I would have a bigger mortgage. If I would going to do the other options - I would agree with you

randomguy
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Re: Do you care about your home appreciating?

Post by randomguy » Tue Jul 16, 2019 8:01 pm

KyleAAA wrote:
Tue Jul 16, 2019 6:29 pm
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?
You have $100k more equity so you are better off. You could choose to rent instead, or buy a cheaper place, or move to a cheaper city. Either way, you have $100k more than you would have had otherwise.
Lets look at it:
You buy a 500k with 20% down. You really want that million dollar house. Property prices double. Where are you?
You have 600k instead of 100k. Thats good.
You now need a 1.4 million dollar mortgage instead of 900k. Thats bad
Your property taxes are now 30k/year instead of 15k. Thats bad
And if you want to rent, the amount you pay just double. Thats bad also

So the person who stays put is a loser. They gained nothing from the house appreciation while they live there.

Now if you sell your house and move some where cheaper, you definitely gain. But if you wanted to live in that cheaper place, why aren't you living there already?

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Re: Do you care about your home appreciating?

Post by Grt2bOutdoors » Tue Jul 16, 2019 8:08 pm

Not really. An appreciated home in my town results in a higher tax assessment. I pay enough in property taxes. High property taxes are a huge turn-off to prospective home buyers.
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Re: Do you care about your home appreciating?

Post by firebirdparts » Tue Jul 16, 2019 8:08 pm

If we’re voting, I do not. I love in a LCOL area so it’s well worth it to me to not care.

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Re: Do you care about your home appreciating?

Post by Grt2bOutdoors » Tue Jul 16, 2019 8:11 pm

Blake7 wrote:
Tue Jul 16, 2019 6:00 pm
We’ve been in our house that we purchased for about $530k for 13 years and it’s now paid off. We paid about $125k in mortgage interest total (less income tax deductions). Because we bought in 2006, our house is today worth slightly more than we paid for it (at the bottom of the market, it was worth about 40% less than what we paid). Whether we sell for more or less than we paid one day, will only be significant on the day we sell. I don’t dwell on home values in the interim that much. If we’d rented for the last 13 years where we live, we’d paid about $343k in rent over that time period. I know here are other cost/opportunity cost variables involved in the above. So I’ve always looked at the financial benefit, if any, of home ownership by comparing it to renting, with any home appreciation, if any, as icing on the cake. Am I looking at this wrong?
No, you are looking at it the right way. And in the meantime, you reaped the benefit of having your own place with no one telling you what you can or can't do on it.
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McGilicutty
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Re: Do you care about your home appreciating?

Post by McGilicutty » Tue Jul 16, 2019 8:19 pm

I'm happy with my VLCOL neighborhood and town the way it is. It wouldn't surprise me if my home is worth in 10 years pretty much exactly what it is now. I don't want to see price appreciation because that likely means that more people are moving in to town and mo' people, mo' problems.

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grabiner
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Re: Do you care about your home appreciating?

Post by grabiner » 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.)
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Luckywon
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Re: Do you care about your home appreciating?

Post by Luckywon » Tue Jul 16, 2019 8:31 pm

Yes I like that my home has appreciated.

-My heirs may sell it (and will have received a nice step up in cost basis).
-If I'm incapacitated and have to live in a facility of some sort, my home's equity may be used to pay for the costs.
-If financial calamity occurs, it may be sold or a reverse mortgage taken out
-I may decide to sell it and move
-I just like the idea of it appreciating

In all these cases, the more it is worth the better.

I live in California. Appreciation in the home has had little to no effect on my property taxes.

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Re: Do you care about your home appreciating?

Post by tesuzuki2002 » Tue Jul 16, 2019 8:33 pm

unclescrooge wrote:
Tue Jul 16, 2019 4:56 pm
If home prices continue to appreciate in SoCal, my kids won't afford to move out of the house.

Plus gardeners, cleaners, teachers, grocery clerks and music teachers will move elsewhere which would be detrimental to society.

As much as I love to have equity in my home, a huge crash wouldn't hurt either.
Home values are really pricing out the less affluent in So Cal. It is getting scary in that many people.. teachers, service workers, grocery, gardeners etc are being pushed out...

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Re: Do you care about your home appreciating?

Post by JonnyDVM » Tue Jul 16, 2019 8:37 pm

delamer wrote:
Tue Jul 16, 2019 4:51 pm
bubbadog wrote:
Tue Jul 16, 2019 4:43 pm
I care about all of my assets appreciating, including my home.
Seconding.
Yes. It’s a double edged sword. We’re staying here for the long term. I like the sharp appreciation we’ve experience as it makes me feel like we made the right decision to buy and adding to net worth always feels good. On the other hand, I’m not so excited about the increased tax bill.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

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Re: Do you care about your home appreciating?

Post by delamer » Tue Jul 16, 2019 8:51 pm

JonnyDVM wrote:
Tue Jul 16, 2019 8:37 pm
delamer wrote:
Tue Jul 16, 2019 4:51 pm
bubbadog wrote:
Tue Jul 16, 2019 4:43 pm
I care about all of my assets appreciating, including my home.
Seconding.
Yes. It’s a double edged sword. We’re staying here for the long term. I like the sharp appreciation we’ve experience as it makes me feel like we made the right decision to buy and adding to net worth always feels good. On the other hand, I’m not so excited about the increased tax bill.
Certainly in our case, the appreciation has greatly outpaced the tax increases.

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Re: Do you care about your home appreciating?

Post by Trader Joe » Tue Jul 16, 2019 8:54 pm

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
No, my house is my home. It is not an investment. Best of luck.

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Re: Do you care about your home appreciating?

Post by AerialWombat » Tue Jul 16, 2019 9:13 pm

Every house I buy is an investment property. I do not now and never will have a "forever home". As such, I absolutely want each house to appreciate.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

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Re: Do you care about your home appreciating?

Post by Ferdinand2014 » Tue Jul 16, 2019 9:13 pm

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
No. Could care not one bit. A home is not an investment. It is a place to keep rain off my head.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

SS396
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Re: Do you care about your home appreciating?

Post by SS396 » Tue Jul 16, 2019 9:29 pm

Not much since I consider a primary home a place to live rather than an investment like a stock or bond. The higher home value just means I pay higher property taxes and likely insurance every year on an asset that does not pay me a dividend. The only way to realize the appreciation is to sell my primary home. Property value appreciation would only matter to me if it was a rental property that I could sell at a profit and turn around and reinvest funds in another asset with attractive ROI.

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Re: Do you care about your home appreciating?

Post by GT99 » Tue Jul 16, 2019 9:54 pm

Trader Joe wrote:
Tue Jul 16, 2019 8:54 pm

No, my house is my home. It is not an investment. Best of luck.
I agree that my home is not an investment, BUT that doesn't mean you don't care about it appreciating. Let's look at another example - it's very rare to look at a car as an investment. But I do care a bit about buying a car that will depreciate less than another option - depreciation is just negative appreciation.

Put another way - I care about things that impact my bottom line. It may not be an investment, but a house certainly does impact the bottom line. It could be higher taxes paid, it could be more gains upon sale. I don't care about it appreciating the same way I care about my investment portfolio appreciating, but I do care.

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Re: Do you care about your home appreciating?

Post by Portfolio7 » Tue Jul 16, 2019 9:57 pm

Yes, to the extent it expands or limits our future life choices.

I'd be very happy if our house and only our house tripled in value. We'd sell it and retire to another home.

I'd be sad if our house tripled in value but every other house quadrupled in value. That would reduce our range of available actions and choices.
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Re: Do you care about your home appreciating?

Post by willthrill81 » 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. But on the other hand, it means that when we sell, which we plan to eventually do, we'll get that much more for it.

However, we don't care about it in the same way as our portfolio. We didn't buy our home as an investment because it isn't. Any appreciation we get from it will be a bonus.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Do you care about your home appreciating?

Post by rascott » 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.

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Re: Do you care about your home appreciating?

Post by Nissanzx1 » Tue Jul 16, 2019 10:30 pm

Current home has climbed 32% alledegly in past 6 years. Past one I left $25000 in the street on repairs so I guess it averages out.

I consider home really more of a lifestyle decision than anything. Ideally I’d like to loose no money but it’s more about day to day life than appreciation. It just means I have to pay more for whatever I upgrade to next time as the market appreciates...

For some people with super high value homes (sometimes heavily leveraged), I can see how they might be mentally consumed with this particular issue...

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