What’s your view on primary home appreciation as part of personal wealth?

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  • #115346 Reply
    USER

      I’m curious of what people on here think about real estate appreciation for primary homes, especially in areas that have appreciated significantly.

      Most people I’ve talked to don’t even take it into consideration in terms of personal wealth, reason being all houses in the area have appreciated, not just theirs, so unless they really downgrade or move out of town, the money they’ll make from selling the current place would be just enough or even less to buy a new place.

      #115347 Reply
      Scott

        Nw is defined as assets minus liabilities. There is no other definition. So yes it counts.

        I’ve moved out of two homes and rented them out behind me.

        When I move out of my 3rd I will downsize and pocket the profit.

        #115348 Reply
        Ian

          Your primary residence is not an investment. You shouldn’t think about it as a growth, income, or wealth building tool.

          You are a consumer in the context of your primary residence and the appreciation just means you are consuming more.

          #115349 Reply
          Christine

            Primary home value won’t come into play until someone inherits it or you have to sell it to move into an apartment or assisted living situation in old age.

            So, it def has value but I don’t consider it as part of my investments.

            #115350 Reply
            Snow

              I’ve compared all my real estate investments, plus cost of taxes, upkeep, insurance, savings for future projects that will need repairs…

              Then I compared just the raw initial cost of the property and time spent on the S&P500….

              it was always a better bet to have invested it over that same time period.

              Plus, the lost opportunity growth of that continued cost of estate ownership over time?

              My house I live in barely breaks even because it’s slightly cheaper than renting in the same area.

              #115351 Reply
              Nick

                Gotta live someplace. My home is not a retirement vehicle. We keep improving it.

                I don’t care to downsize.

                #115352 Reply
                Jule

                  My house has appreciated $1M in the four years we’ve had it. However we don’t plan to move for a long, long, long time, well into our future retirement.

                  So, what good does it do to count on that equity?

                  I still need to live somewhere and we choose to live here.

                  #115353 Reply
                  Aaron

                    My house has appreciated significantly since I bought it especially considering that it’s leveraged.

                    Yeah, it isn’t like money that I have in a bank account or a brokerage account that I could just pull out tomorrow, but I could borrow against it if I wanted to, and if I wanted to downsize (which I have considered / am considering) or arbitrage to a lower col area there is significant value to be had.

                    I think you should also consider the net present value of future savings on rent.

                    For example, after having had this house for 6 years my monthly mortgage with property taxes and everything is 1700.

                    A lot of apartments in this area cost more than that.

                    My monthly payment will increase overtime slowly as property taxes and homeowners insurance go up, but it won’t go up nearly as much as rent would.

                    I’d be in much worse shape now if I hadn’t bought my house when I did.

                    #115354 Reply
                    Katy

                      Our home has tripled in value over 18 years. We have no mortgage – however- when we downsize, there will be a chunk of change not needed.

                      I also think of it as an investment for my estate too.

                      #115355 Reply
                      Tom

                        I consider housing to be an expense. The only way to actually use that money is to either refinance or apply for a HELOC (and I already have a small HELOC and don’t care to expand it).

                        With my 2.25% fixed rate mortgage, I am most definitely not interested in refinancing (plus don’t like the idea of extending my mortgage even more).

                        Sure, I have “tons” of equity – equity that, as you said, will go towards my next house.

                        It’s not money I can use for something else and a reverse mortgage is a horrible thing.

                        So no, it’s an expense and I don’t include home value in my net worth.

                        #115356 Reply
                        Christina

                          I include it in Net Worth but not FIRE number, which is the number we care about.

                          #115357 Reply
                          Donna

                            Primary home is an investment, it appreciates though not liquid. You can even turn it to rental someday.

                            It improves quality of life if you choose the right one that fits your budget and the right location.

                            #115358 Reply
                            Carrie

                              I count it with an asterisk next to it. My husband and I are looking to purchase a business right now and the SBA does take home equity into account when evaluating your loan worthiness, so it’s not nothing.

                              Also, many people who invest in real estate start by using equity from their home (not saying that’s a good idea or not).

                              My point being that whether you’re using the equity or not, the fact that it’s there opens up further investment opportunities which is why I count it.

                              Also, I think of my sister in law who owns no home. If things went south for her she would have absolutely nothing to fall back on.

                              If things went south for us (and they’d have to go really really south) we could sell our home and walk away with $400k cash. Obviously not an ideal scenario but again, it’s not nothing.

                              #115359 Reply
                              Dew

                                Think of it as a nice to have. It doesn’t really help you RE unless the mortgage is paid off.

                                In terms of the appreciation itself, that also doesn’t help you unless as you said you downgrade to a much cheaper house.

                                In the long run, it’s better to have an appreciated house than to rent for decades on end.

                                #115360 Reply
                                Randy

                                  Builders/developers are going to be flooding the market with “affordable/attainable” homes over the next 5 years. I’m talking about 900sf two story boxes on 35 foot wide postage stamp size lots.

                                  HOA dues and metro district taxes selling for $400k-$450k.

                                  Young buyers will be buying these things and not building any equity at all. Maybe going upside down. Disgusting to me.

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