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Comment by globular-toast | Hacker News Reader

If only more people understood that. Almost all homeowners think that rising prices is a good thing for them. Try convincing your average homeowner that the whole market going up by 10% makes no difference to them unless they plan on being homeless.

There's something about money that brings out the worst in people, whether that be malice or simply stupidity.

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Or unless they’d consider downsizing or renting. House prices going up are generally good for owner-occupants.

For a homeowner that is not interested in selling or refinancing, the price going up itself is not good news. It really only means higher property taxes.

However, home prices are, many times, also a reflection of the local economy and the earning and/or spending power of the locals (or tourists). And usually, higher earning/spending power is better than lower earning/spending power.

You just have to ensure you are in position to grab a portion of that economic activity, which is a better situation to be in than trying to grab a portion of no or little economic activity in a struggling region.

In my city, property taxes are set to raise the needed city budget. If everyone’s property value doubled, the city budget would not double, but rather the tax rate per $1K would drop to raise the same revenue.

Over the long term it would have to double since expense for land flows through government expenses, for example when the government needs to buy land or employees want more pay to afford buying houses.

If the nominal value doubled by virtue of debasement of the currency (inflation), then yes all goods and services would double (including property taxes). If only the value of properties doubled in a city, that would increase but not nearly double the required budget as not nearly every cost the city incurs is pegged to property costs.

As an aside, my property has approximately doubled (in Zillow guesstimate and in assessed value) since we bought it in 2007. Our property taxes over that time went from around $8K to around $12K. An inflation calculator over that period would say that $8K in 2007 is worth $11.7K today, suggesting that property taxes track general inflation much more closely than they follow property values.

So, my property has doubled in nominal value, representing a 36% increase in real dollars, while my property taxes have gone up by only 3% in real terms.

Edit to add: inflation of course massively helps mortgage borrowers. If I bought my house for 100 units of currency, borrowing 80 and the currency change worth such that it now takes 147 units of currency to buy the house (just from inflation effects), then I still owe only the original 80 units of the now less valuable currency (minus principal repaid in the meantime). Inflation just paid off over 30% of my mortgage for me.

>only the value of properties doubled in a city, that would increase but not nearly double the required budget as not nearly every cost the city incurs is pegged to property costs.

Correct, but that is because the current politics are all about shifting the burden to future generations, and one of those ways is vis drastic subsidies to land owners from non land owners via undeservedly low land value taxes.

Perhaps my claim of 1 to 1 relationship between property (land value) tax and land/house price is too strong, but at some point, it will have to go higher and catch up.

If you have a low mortgage rate, borrowing against the increased value of your home to invest is free money

What do you mean? You need to pay pretty stiff interest for a Heloc no?

I am incorrect. rates are indeed very stiff right now

It matters if you enjoy screwing the next generation of first-time homebuyers!

It's not stupidity, it's an economic feedback loop, like auctioning a dollar bill. Once you enter the trap, you are trapped.

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