whats nuts is people want their homes to go up in value. You pay taxes based on home value. I want my home to be lagging behind everything in the area im not cheering everything getting more expensive. Its like are all these people flipping every two years???
Don’t see how that plan makes them want the place they live in now and their expenses now go up. fact is the place they downsize to will have gone up. its a zero sum game overall.
If housing prices, I don’t know, triple, and then they move into a place that’s half as expensive, they still have three times more cash in hand than they would with no price increase. If general inflation is lower than that, it’s to their benefit. (There’s also those reverse mortgage ads all over old people TV, if they want to stay put)
Whether this is the great investing strategy it’s been sold as is another question. General inflation does exist, housing prices don’t always go up even over the long term, and even the greatest markets still tend to have a lower return than equities and probably even some bonds. The big positive a financial advisor will mention is that paying off a house forces you to actually sock money away instead of spending it all.
It just does not work that way. All houses do not triple. The change in price at different levels change at different paces and lately its the cheaper stuff that has risen a lot. If you have those segments on ultra rich properties in your area you will often see how they sold at some huge price and sold for way less or vice vera. They are aweful swingy. The lower the cost the more definitive the cost is as. Real cost reduction comes from getting something dilapidated but most people in downsizing are going from something older in need of repair to smaller but well renovated. People really have been sold on this idea of rising line good no matter what when what really matters is their current monthly nut and their ability to have cash over and above that for quality of life and savings.
Cheap houses in my area have actually been a lot less stable in price. But sure, if whatever they move into has risen faster that’s another way it could fail.
yeah its kinda funny because if you are selling and buying afterwards it would be better for you if it was a falling market than rising. Honestly as a normal individual I can’t for the life of me figure out a rising cost scenario that actually is good for me financially except to refinance but I lean toward not wanting to be in debt more than to be in more debt.
Property taxes are typically very low compared to the capital gains they will accrue. On balance, it’s still a great deal for the individual if home values skyrocket. Of course, it’s terrible for society. On the other hand, if land taxes were 5%, then you would be correct: people would hate for their properties to jump in value. If they went up too much, they would sell and move elsewhere, pushing up supply and reducing prices.
capital gains only comes into play if you did not live in the house for two of the last five years you own it. Anyone who actually lives in their house does not have to worry about that. Property taxes are a major expense. One thing I see with people who have not owned real estate is they think a paid off house has no expenses but the taxes, insurance, and if you have something with an association (often times the only affordable option in metro area) and you still have a monthly nut. Its a bit lower but not static because all three of those things are as effected by inflation as anything else.
If they went up too much, they would sell and move elsewhere, pushing up supply and reducing prices.
And then you’d actually have the same problems, just with land that’s easy to buy but has less earnings potential. It’d still be comically expensive to get utilities put in, in some jurisdictions, and you’d still have to wrangle a giant crowd of NIMBYs every time you want to build anything meaningful.
You pay taxes based on relative home value, not absolute value. If everyone’s house goes up by the same percentage, everyone still pays the same amount of tax. It’s only when you make big renovations or additions that your property taxes go up relative to your neighbours.
yeah but that is what people get excited about. The value going up of theres or the complex and not in the whole area. I want my place to be the cheapest in the area. Until I need to move of course then I want it highly overvalued.
whats nuts is people want their homes to go up in value. You pay taxes based on home value. I want my home to be lagging behind everything in the area im not cheering everything getting more expensive. Its like are all these people flipping every two years???
Or they plan to eventually sell when they retire and downsize.
Don’t see how that plan makes them want the place they live in now and their expenses now go up. fact is the place they downsize to will have gone up. its a zero sum game overall.
If housing prices, I don’t know, triple, and then they move into a place that’s half as expensive, they still have three times more cash in hand than they would with no price increase. If general inflation is lower than that, it’s to their benefit. (There’s also those reverse mortgage ads all over old people TV, if they want to stay put)
Whether this is the great investing strategy it’s been sold as is another question. General inflation does exist, housing prices don’t always go up even over the long term, and even the greatest markets still tend to have a lower return than equities and probably even some bonds. The big positive a financial advisor will mention is that paying off a house forces you to actually sock money away instead of spending it all.
It just does not work that way. All houses do not triple. The change in price at different levels change at different paces and lately its the cheaper stuff that has risen a lot. If you have those segments on ultra rich properties in your area you will often see how they sold at some huge price and sold for way less or vice vera. They are aweful swingy. The lower the cost the more definitive the cost is as. Real cost reduction comes from getting something dilapidated but most people in downsizing are going from something older in need of repair to smaller but well renovated. People really have been sold on this idea of rising line good no matter what when what really matters is their current monthly nut and their ability to have cash over and above that for quality of life and savings.
Cheap houses in my area have actually been a lot less stable in price. But sure, if whatever they move into has risen faster that’s another way it could fail.
yeah its kinda funny because if you are selling and buying afterwards it would be better for you if it was a falling market than rising. Honestly as a normal individual I can’t for the life of me figure out a rising cost scenario that actually is good for me financially except to refinance but I lean toward not wanting to be in debt more than to be in more debt.
Property taxes are typically very low compared to the capital gains they will accrue. On balance, it’s still a great deal for the individual if home values skyrocket. Of course, it’s terrible for society. On the other hand, if land taxes were 5%, then you would be correct: people would hate for their properties to jump in value. If they went up too much, they would sell and move elsewhere, pushing up supply and reducing prices.
capital gains only comes into play if you did not live in the house for two of the last five years you own it. Anyone who actually lives in their house does not have to worry about that. Property taxes are a major expense. One thing I see with people who have not owned real estate is they think a paid off house has no expenses but the taxes, insurance, and if you have something with an association (often times the only affordable option in metro area) and you still have a monthly nut. Its a bit lower but not static because all three of those things are as effected by inflation as anything else.
That depends on jurisdiction.
yeah im talking in the us.
And then you’d actually have the same problems, just with land that’s easy to buy but has less earnings potential. It’d still be comically expensive to get utilities put in, in some jurisdictions, and you’d still have to wrangle a giant crowd of NIMBYs every time you want to build anything meaningful.
You pay taxes based on relative home value, not absolute value. If everyone’s house goes up by the same percentage, everyone still pays the same amount of tax. It’s only when you make big renovations or additions that your property taxes go up relative to your neighbours.
yeah but that is what people get excited about. The value going up of theres or the complex and not in the whole area. I want my place to be the cheapest in the area. Until I need to move of course then I want it highly overvalued.