Sunday, June 22, 2008

Your house is not appreciated

I watch a lot of HGTV, especially on the weekend.  One of these days I'm actually going to get around to doing some redesign myself.  There are a few shows though that can't fail but tick me off - Designed to Sell, House Hunters, Flip that House, and any other show where they're buying or selling houses.  It's not that the show itself is bad - I like seeing the homes and I typically like the way they fix them up to get them sold - it's the prices they want to charge!

A home is not worth more now than when it was built.  It's a myth.  The land might be worth more because of demand and because there is less land available, but the house itself is inherintly worth less.  It's older, more prone to need maintenance, damaged, patched, and generally more beat up than a new home.  Your home is not worth more than when you bought it.  It's not.

What's worse is that people think that they're making money: I bought my home for $175,00 and now it's worth $200,000.  I just made $25,000!  Wrong.  The problem is that you're charging more for your home, but so is the person your buying your next house from.  You might be "making" $25,000, but the person your buying your next home from might be charging $40,000 more than what they paid for it so your paying more for your next house than you should be and thus actually losing money overall.  When you include the amount of extra interest you're paying due to the larger lone for this new, higher priced home, you lose out even more.

The only real winners are real-estate agents and banks.

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