I'd be happy about it too, but am overwhelmed by guilt when talking to my intern, our newly hired engineer, my younger siblings, and many of my friends who rent at ever-increasing rates.
That $230,000 was taken from the pockets of my non-homeowning friends. I don't understand how so many seem to be cheering the rising prices, oblivious to what it's doing to our society.
Nope! First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper.
Second of all, when you do sell it, the money will come from the pockets of your willing buyer :-)
Edit: if you still want to feel bad about something, let it be this: that the rise in your home's value represents wealth that has been created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and your ability to capture all of that increase via your untaxed monopoly on the ground rent creates a deadweight loss for the broader economy.
But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)
I am struggling to find the right words to express how wrong your view is to me. Housing is a basic human need like food and clothing. How can you in good conscience celebrate making a tremendous profits exploiting the fact that people cannot afford a basic need?
Then surely I have failed to convey it!
In any case, my edited point about "deadweight loss" is perfectly consonant with the parent poster's feeling of guilt, and with what I presume is your feeling of disgust; it is in fact the economic term of art for that at which you intuitively recoil.
(Although you're kind of equating a very, very expensive home, in the overall scheme of things, with the minimum requirements of decency, if you really think that he's exploiting someone's inability to afford housing, but w/e.)
Now let's get into the controversial stuff...
> Housing is a basic human need like food and clothing.
Agreed. But it's also an asset, because someone has to build and maintain it and have exclusive use of (at least parts of) it, and being a basic need doesn't automatically create a right to something (for obvious reasons) so that asset is gonna trade hands voluntarily like any other. Its price will fluctuate, sorry.
Now, NIMBYs using government fiat to drive down housing supply in their market is an annoyingly common failure mode of local democracy, maybe that's all you're upset about.
Yes, food, but I don't see many arguments for bringing down the price of caviar.
IOW, making an argument against high property prices in highly desirable areas is not the same as making an argument for low cost housing.
It doesn't really matter how dense you make housing in highly desirable areas, there'll always be more people who want to live there than houses available.
The solution is more remote working and much faster public transport.
Tax breaks on businesses for each remote worker will be cheaper than building more slums, it will be quicker (demand is affected almost immediately) and it needs no political campaigning against the local NIMBY residents.
Instead of trying to guilt trip people about the paper value increase in their property, just remove that paper value increase altogether.
(I'm not sure how you would solve the slow public transportation problem. Where I am we have 160km/hour trains, but the door-to-door travel time using these trains to travel 20km is still about twice the time it takes to drive)
If someone discovers their vintage car is worth more than they paid for it as teenager should they feel guilty over this?
Do you feel guilty when you eat food because someone somewhere isn't?
I'm completely missing your point.
If I buy property in a developing area because I think it's cool, and I live there for years and am part of the community and watch it grow around me, and years later decide to sell - I took an early risk, don't I deserve to recognize the rewards from that risk?
If it was a bad risk and the area went to hell, and I lost money - is that ok?
But making money isn't?
Should home builders not be allowed to make money because housing is a basic human need?
Should we not be allowed to build luxury homes that cost more because we could have built multiple cheaper ones with the same money?
What should the rules be, in your opinion?
When the people who "generate wealth" are doing so by dictating prices, that seems a bit sketchy to me.
The ironic thing is that housing scarcity often ends up making a place much less desirable -- even for the entrenched homeowners who cause the scarcity problem.
Homeowners with this much gain based on artificial supply constraints should definitely feel bad.
It comes from their pockets when they pay rent. Meanwhile you, as a property owner, receive thousands of dollars a month in imputed rent by owning a place to live.
You also have the ability to spend the money without selling the property by borrowing against the equity, as many people do.
> Second of all, when you do sell it, the money will come from the pockets of your willing buyer
People "willingly" subscribe to Comcast. Not because they prefer doing business with Comcast or believe themselves to be getting a fair deal.
> if you still want to feel bad about something, let it be this:
The people celebrating the increase in housing costs because they own housing should feel bad about it. Especially the ones who caused it by lobbying for zoning restrictions.
> But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)
This doesn't actually fix housing shortages created by restrictive zoning -- which you could conceivably still have with a land value tax and a government that keeps the restrictive zoning to maximize land values and therefore tax revenue. (Land is worth a lot more if you need it proportionally to build housing instead of just buying one piece of land to build an arbitrarily large amount of housing by building an arbitrarily tall building.)
Assuming that property tax has been tracking the current market value of the house then yes.
But in California prop 13 means that isn't the case
As analogy: "It sucks that my peers earn less than me because they are part of <X disenfranchised group>"; You: "Why don't you just take your extra income and give it to them?"
What I'm doing now is renting out that house at less than my mortgage whilst living in a different country with higher taxes and which generally takes better care of its people (the blight that is the Tories notwithstanding).
That said, you can't expect people not to play the game if they're forced to play the game. Those of us in the western world pretty much all live in capitalist countries; the best we can do is ensure that we're doing well in our own lives whilst trying to fix the game for those who aren't doing so well. Taking out a HELOC and giving the money to friends is a substantial financial risk that jeopardises our own comfort without having a clear positive impact on those friends and without really fixing the underlying problem. It's like giving cash to a homeless person instead of giving them housing and support -- the cash will be gone soon, and the system that resulted in their homelessness won't be fixed, nor will you have prevented any future homelessness.
tl;dr, you can own a house and live comfortably whilst still lamenting the fact that your friends can't, and this isn't an inherently hypocritical stance. You're just lamenting the fact that the game you're playing necessarily has winners and losers, and wishing that would change.
IF someone actually means it, though, (which is a very big IF), taking out a HELOC and giving the money to friends for their own down payments is nothing like giving cash to a stranger with a demonstrated history of ending up without money.
If someone really does think their position is a fortuitous accident, and that their friends are equally deserving, just less lucky, they can settle the score. They can take the fruits of their luck, give it to their friends to afford them the same advantage of home ownership, and place themselves in a financial situation similar to their friends. Similar interest rate. Similar equity in the home. Even things out again.
There might be people who really do believe they should right a wrong, and they have the opportunity.
Realistically, I think it's like the richest people who bemoan the injustice that they don't even pay taxes as high as their hired servants, but wouldn't dream of using the IRS's easily available option to pay more taxes voluntarily.
I don't like it when people get points for pretending they care.
You bought a house and you live in it. Feeling guilt over something that isn't your fault makes no sense. If it makes you feel _better_ to try to help solve the problem, that's great; but that's totally different than guilt.
Just like it's not right to feel bad that you can't keep up with the Joneses, its not right to feel guilty that the Smiths can't keep up with you.
If the food in your fridge or the clothes in your closet were suddenly drastically more expensive and you could make a profit selling them, would that be a good sign for your society and community? Would you view it as a sign of prosperity that your well stocked pantry was now a source of funds you can tap by selling to starving people?
Housing is a basic human need and it’s all but unaffordable. Even if you personally profit surely you can see that this is corrosive to society as a whole.
1. Through the years you own your home, you will pay roughly 1% of the notional value of the property in state and local property taxes EACH YEAR. You already know this.
2. When you sell your house, agents will eat 5% and the state you are in will take another ~3%. Other closing costs, the expense and the hassle to spruce up the house for sale. Round it off to a 10% haircut of the selling price.
3. If you're single the first $250K of capital gains on your primary residence is exempt from federal income tax. Beyond that the IRS will take its cut. Include the Net Investment Income Tax (NIIT) and you're looking at 24% tax on any capital gains, assuming you will be in a high tax bracket when you sell. And depending upon the state you live in, there will be capital gains taxes paid to the state.
Now look around you at the prices of groceries and meals. I have seen these costs roughly double in the last 8 years.
So it's not just that your house has appreciated in value -- it's more that the value of the dollar has gone down. And the plumbers and electricians and construction workers needed to build a new house have also gotten more expensive. By buying real estate you have managed to preserve your buying power somewhat so it's not eaten up by inflation.
You're not as rich as you think, but at least you're better off than the intern and your younger siblings. (edit: formatting)
Would that alleviate your guilt?
