Reply to Isn't trading up going to end as folks are priced out?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][i][quote=Anonymous][quote=Anonymous]I thought we were supposed to trade up because we went up a bunch of income rungs. [/quote]

Well that, plus your house appreciation to make it possible for a larger house down payment, and wanting a larger house in response to a changed need for housing - in terms of size (kids and/or aging parents moving in), then ideally you can sell for profit to put in retirement

You aren’t “supposed to” do anything that’s just one of the strategies,  buying younger/earlier/smaller and use the appreciation and your advanced income so you’re not priced out of a nicer house down the line when you need that   [/quote]

I don’t understand that because won’t all the houses have appreciated at the same rate? How would my appreciation help me trade up?[/quote]

In theory, your appreciation lets you put down a larger down payment. You have also continued to save on housing cost (relative to renting) as you have lived in your home. And as your income has grown, you have hopefully saved more so you can afford to put down a larger down payment or handle a larger mortgage. [b]The issue right now is that housing prices have grown significantly faster than your income isn't keeping up, and as rates have gone up, you also need to account for a greater interest payment[/b]. [/quote]

This happened to us. We have a lot more wealth on paper (home equity) than compared to our salaries, which have gone up but not nearly 50% like housing around us. Also we now have kids so our other expenses have gone up. Not just childcare, extracurriculars, etc. in the immediate term, but any allocation of money toward a bigger house would take away from what we could contribute to their 529s. At some point you say the house is fine, we like our neighborhood, let’s put our extra income toward college. From talking to friends in Arlington, a lot of us are in the same boat. We can’t afford to upgrade in our school zone and don’t want to move farther out. Guess we’ll make our money when we cash out of the area someday.[/quote]

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