Should current homeowners wish for home values to decline?

[Anonymous]

I think we need to shift the mindset from the home as an asset and forced savings to more consumption - it is simply a place you live. So much of our policy is dictated by maintaining the value of this highly illiquid asset.

Homeowners want it all - they want their home price to be high, they want their property assessment to be lower, they don't want to build more in the neighborhood, and want to be able to get money out.

[Anonymous]

Anonymous wrote:I think we need to shift the mindset from the home as an asset and forced savings to more consumption - it is simply a place you live. So much of our policy is dictated by maintaining the value of this highly illiquid asset.

Homeowners want it all - they want their home price to be high, they want their property assessment to be lower, they don't want to build more in the neighborhood, and want to be able to get money out.

+1. OP asked a provocative question that will obviously upset a lot of people because most Americans still count on their current home to be able to afford retirement.

[Anonymous]

Wages will absolutely not be able to keep up with rising home values and property taxes. Property taxes aren't being talk about a lot, but given how much housing sucks up the typical homeowners budget, some people even feel a tiny percentage increase in their property taxes.

[Anonymous]

Wait till you pay higher prices on everything due to tariffs, there will be no room left for savings.

[Anonymous]

Anonymous wrote:I do wish they would decline. My wife and I were discussing how none of our young friends (responsible professionals) are finding it possible to afford a house. My 9-year-old daughter asked for more info, and my wife explained that housing prices have gone up much faster than wages over the last 10 years. And that we wouldn't have been able to afford our own house under these circumstances.

My daughter said, "What will happen to us (her and her siblings), then?"

What indeed?

DH and I live below our means (except for private school) to be able to buy each of our 4 kids a decent house in NW DC. We buy and rent so the rent pays for the mortgage. We have been lucky so far, but I do worry about rents decreasing/unemployment increasing…

[Anonymous]

Anonymous wrote:

Anonymous wrote:It seems weird to expect people who own an asset to hope the value will go down so that someone else can afford to buy it. If housing values drop, some people will be underwater, lose all equity and may be forced to sell. This would benefit you nicely but that other family just lost their home.

It’s similar to the whining as to why boomers aren’t updating their homes AND pricing them as if they aren’t updated, so new buyers get a better deal and hassle free move in ready with HGTV design.

The housing crisis is about basic high density housing and fast, reliable public transit not being available leading people into homelessness or sitting in their car 3-4 hours a day commuting. The housing crisis is NOT you not being able to afford a nice SFH near walkable restaurants, great school district and short commute.

Agree with all of this. I'm also sick of hearing people whining about boomers not gifting them a renovated house for far below market value. I'm sick of the boomer-blaming ageism in general (and no, I'm not a boomer).

I don't blame the boomers for selling their homes for top dollar. They only need one buyer to pay that price, and unfortunately due to the lack of inventory, there is a buyer out there. But I do blame the boomers who vote against building new housing because it might affect their home price or boomers who request tax breaks to stay in their homes. Not every boomer is like this, but a lot are!

[Anonymous]

Anonymous wrote:I sort of do. Our house is overpriced. Even I can see that. We can’t upgrade because the houses we’d consider are going up faster than ours. The percentage may be the same but the dollar gap grows bigger. Also, my kids will never be able to purchase anywhere in the DC region at this rate. Our young adult college grad daughter works full time and can’t even afford rent within an hour commute of Bethesda.

This. Our house has gone up $700K to ~$2M in less than 4.5 years - we are two months away from that mark - with zero big improvements on our end. We moved in with one child and now we have three. It’s a great house in a great location but imagine 4 beds/3 baths in 1800 sqft. It works, but it’s not a ton of space for 5 people. We would like to move to a larger house in a few years, but houses that were trading for $200K more than our house 4.5 years ago are trading for $650K more now. I wish we had bought a larger house, but at the time we had no reason to think our income would go up more than double in 4 years. I’m glad we bought in 2020 and locked in a great interest rate, but at this rate of appreciation trading up will mean paying lots of capital gains taxes when we sell and paying a ton more than we would have in 2020, and all for a house that will probably only be 1200 sqft larger. I want interest rates to fall, but I think that could push prices higher and I think most markets are already overpriced.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I sort of do. Our house is overpriced. Even I can see that. We can’t upgrade because the houses we’d consider are going up faster than ours. The percentage may be the same but the dollar gap grows bigger. Also, my kids will never be able to purchase anywhere in the DC region at this rate. Our young adult college grad daughter works full time and can’t even afford rent within an hour commute of Bethesda.

This. Our house has gone up $700K to ~$2M in less than 4.5 years - we are two months away from that mark - with zero big improvements on our end. We moved in with one child and now we have three. It’s a great house in a great location but imagine 4 beds/3 baths in 1800 sqft. It works, but it’s not a ton of space for 5 people. We would like to move to a larger house in a few years, but houses that were trading for $200K more than our house 4.5 years ago are trading for $650K more now. I wish we had bought a larger house, but at the time we had no reason to think our income would go up more than double in 4 years. I’m glad we bought in 2020 and locked in a great interest rate, but at this rate of appreciation trading up will mean paying lots of capital gains taxes when we sell and paying a ton more than we would have in 2020, and all for a house that will probably only be 1200 sqft larger. I want interest rates to fall, but I think that could push prices higher and I think most markets are already overpriced.

**sorry, we would probably pay $650 more over what our house is worth for a house that is 800 sqft larger. 1000-1200 sqft larger would probably be closer to $900K more.

[Anonymous]

OP it's not unique to the US. I recently sold a property that I inherited in a very poor country in Africa. I was expecting maybe $100k and I sold it for $500k. We are talking about a country with a GDP per Capita less than $1000. Of course I was happy. I am even more happy that I sold it now because it's clearly a bible waiting to beust, but then people over there told me the increase in property values has been constant for the last 20 years.

We will simply reach a point where wages won't be able to keep.up and only a fraction will be able to buy. When we get to that point what will happen to home values then? I don't know.

In the context of get US assuming immigration is severely restricted, low birth rates consist and aging accelerate, in that scenario can we still expect home values to keep rising? Again I don't know

One thing is clear every single homeowner wants endless increase me included lol.

I think you answered your own question. Major political change due to economic stresses. We are already seeing it. Dollar is being devalued. Markets collapse. Your home relative to the strength of the dollar will weaken as an asset. But hopefully you view it as a place to live and not an appreciating asset. When you consider taxes, insurance, and maintenance it's not really a great "investment" anyway unless you get lucky with your location improving or something like that.

[Anonymous]

Only if interest rates also go down because otherwise we are screwed when we move.

[Anonymous]

Yes I own and hope prices come down. High prices keep people trapped and limit our ability to move for better jobs or other life reasons.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I do wish they would decline. My wife and I were discussing how none of our young friends (responsible professionals) are finding it possible to afford a house. My 9-year-old daughter asked for more info, and my wife explained that housing prices have gone up much faster than wages over the last 10 years. And that we wouldn't have been able to afford our own house under these circumstances.

My daughter said, "What will happen to us (her and her siblings), then?"

What indeed?

DH and I live below our means (except for private school) to be able to buy each of our 4 kids a decent house in NW DC. We buy and rent so the rent pays for the mortgage. We have been lucky so far, but I do worry about rents decreasing/unemployment increasing…

Yes, agree, this is more or less what we told her. We have 4 kids, too, and 1 on the way. I don't know that we'll be in quite as good a position as you are, but we'll be able to help substantially.

[Anonymous]

Anonymous wrote:

OP it's not unique to the US. I recently sold a property that I inherited in a very poor country in Africa. I was expecting maybe $100k and I sold it for $500k. We are talking about a country with a GDP per Capita less than $1000. Of course I was happy. I am even more happy that I sold it now because it's clearly a bible waiting to beust, but then people over there told me the increase in property values has been constant for the last 20 years.

We will simply reach a point where wages won't be able to keep.up and only a fraction will be able to buy. When we get to that point what will happen to home values then? I don't know.

In the context of get US assuming immigration is severely restricted, low birth rates consist and aging accelerate, in that scenario can we still expect home values to keep rising? Again I don't know

One thing is clear every single homeowner wants endless increase me included lol.

I think you answered your own question. Major political change due to economic stresses. We are already seeing it. Dollar is being devalued. Markets collapse. Your home relative to the strength of the dollar will weaken as an asset. But hopefully you view it as a place to live and not an appreciating asset. When you consider taxes, insurance, and maintenance it's not really a great "investment" anyway unless you get lucky with your location improving or something like that.

+1. Well said. I always tell anyone who wants to buy a house to look at as a shelter first and foremost.

[Anonymous]

Anonymous wrote:

OP it's not unique to the US. I recently sold a property that I inherited in a very poor country in Africa. I was expecting maybe $100k and I sold it for $500k. We are talking about a country with a GDP per Capita less than $1000. Of course I was happy. I am even more happy that I sold it now because it's clearly a bible waiting to beust, but then people over there told me the increase in property values has been constant for the last 20 years.

We will simply reach a point where wages won't be able to keep.up and only a fraction will be able to buy. When we get to that point what will happen to home values then? I don't know.

In the context of get US assuming immigration is severely restricted, low birth rates consist and aging accelerate, in that scenario can we still expect home values to keep rising? Again I don't know

One thing is clear every single homeowner wants endless increase me included lol.

I think you answered your own question. Major political change due to economic stresses. We are already seeing it. Dollar is ourbeing devalued. Markets collapse. Your home relative to the strength of the dollar will weaken as an asset. But hopefully you view it as a place to live and not an appreciating asset. When you consider taxes, insurance, and maintenance it's not really a great "investment" anyway unless you get lucky with your location improving or something like that.

Exactly this! That is why when I retire and pay off my home I’ll be putting the 2M in the bank and become a renter in the same neighborhood. Or, I’ll be given my children the money to purchase their move up home. I’ll still have enough retirement to cover living expenses and health

[Anonymous]

I only hope to be able to keep our jobs and continue to pay the mortgage. In addition to the gutting of the federal government and contractors, the instability of the lunatic in the white house is causing clawing back in other industries, as well.