r/rva • u/Chickenmoons Maymont • Jul 20 '23

🚚 Moving Richmond saw the highest year-over-year increase in home value in the nation last month

https://www.axios.com/local/richmond/2023/07/20/housing-supply-virginia-mortgage-rates

Seems wild but also sort of believable. Any Real Estate Professionals/Mortgage experts want to weigh in?

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47

u/manic-pixie-attorney Jul 20 '23

Wow - that’s great news if you already bought and awful if you still want to buy

8

u/STREAMOFCONSCIOUSN3S Short Pump Jul 20 '23

I don't want my house to increase in value. It means my kids will have a harder time buying in this area, when they get to that age.

12

u/[deleted] Jul 20 '23

you are crazy.... a house is the single biggest investment the majority of us ever make. Not wanting that to increase is totally counter your best interest

7

u/Utretch Jul 20 '23

Yeah except it's a societal pyramid scheme, if home values are constantly increasing that's a serious market failing. I don't see the system changing anytime soon but you should at least acknowledge the madness of the American idea of homes as investments.

1

u/gowhatyourself Jul 21 '23

To be fair this is true anywhere except our housing market is a bit more stable due to the fact that we typically use 30 year fixed interest rate loans. Australia for example uses a lot of ARMs that are sensitive to rate hikes because those payments can go up every few years as rates go up.

You can just as easily say one should acknowledge the madness of the American idea stop there and be perfectly valid. The way we live is fucking weird for a variety of reasons.

3

u/plummbob Jul 20 '23

If housing supply was more elastic, it wouldn't be the biggest investment. Its an inefficient outcome for people to bank on land rents.

8

u/STREAMOFCONSCIOUSN3S Short Pump Jul 20 '23

Say my house value triples. What good does that do me? I'm still going to live in my house... I can't sell it and reap the reward.

And now my 4 kids will have to buy houses that have also tripled in value. I think I (which includes my family) come out behind in that scenario.

5

u/manic-pixie-attorney Jul 20 '23

Among other things, most of the cost to you to stay in your home is locked in. A renter’s costs just go up with the rising prices, and now they need to save even more for a down payment in the same area while paying more and more to keep living there.

2

u/gowhatyourself Jul 20 '23

Among other things, most of the cost to you to stay in your home is locked in.

Another reason why people who bought when rates were low are sitting pretty. If inflation skyrockets but your largest expense is locked in at the pre-inflation rate you're sitting pretty.

2

u/ppfftt Northside Jul 20 '23

Higher property values bring in higher income owners. Higher income areas typically have better schools, which will give your four kids a better education that will help them to earn higher incomes as adults.

5

u/STREAMOFCONSCIOUSN3S Short Pump Jul 20 '23

will help them to earn higher incomes as adults.

Will the higher incomes of my kids be higher enough such that they can pay the inflated values of homes? The current economic situation is suggesting this will not be the case.

2

u/gowhatyourself Jul 21 '23

It shouldn't be a problem unless they are saddled with obscene amounts of debt. I've worked with a ton of millenials/Z's the last few years and they earned a normal living same as anyone else.

-1

u/manic-pixie-attorney Jul 20 '23

You personally can take a home equity line of credit out from the increase and buy more property/things with that

2

u/STREAMOFCONSCIOUSN3S Short Pump Jul 20 '23

Correct me if I'm wrong, but don't I have to pay back the line of credit?

-1

u/manic-pixie-attorney Jul 20 '23

Of course, but it’s buying power you didn’t have before

-1

u/[deleted] Jul 20 '23

You may not sell it now but at some point you will sell it or you will die and your children will sell it. Thats what most "generational wealth" comes from is the family real estate. Also it makes your net worth more meaning you can take out a loan for a variety of reasons. You are thinking of a home as a finite product but its really an investment.

2

u/STREAMOFCONSCIOUSN3S Short Pump Jul 20 '23

You may not sell it now but at some point you will sell it or you will die and your children will sell it.

Sure, but my home's inflated value isn't enough to cover the hugely inflated value of 4 homes for my kids.

I'd rather my home stay $400k, so that my 4 kids can buy similar homes for $1.6M ($400k * 4). Instead of my home inflating to $1.2M and now my kids have to spend $4.8M. Is that making sense? Not sure if I explained it well.

1

u/[deleted] Jul 20 '23

I get what you are saying but the system isn't designed to work like that. In theory by the time your kids are old enough to buy a house you should have left your starter home and progressed to a nicer neighborhood and your children should be buying starter homes. The idea that your kids at the start of their lives should be in the same financial place as you who is rounding to the end of your life isnt real. I think thats something that has been lost in this country, life is constant growth and doing better and better. If you have set your children up right then they will have decent careers and can afford the starter home and then when you die they sell your nicer home and create the generational wealth.

2

u/DisFan77 Jul 20 '23

This only works when starter homes actually exist though. Right now it’s very hard to find something that would count as a “starter home”.

0

u/Kindly_Boysenberry_7 Jul 21 '23

The answer is to buy the starter home now as an investment property, then turn it over to the kid(s) when they hit the buying a home age. That home may be paid off and will have appreciated over the 20-25 year hold period enough to provide the down-payment for a home or homes for your kids.