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10-24-2006, 08:56 PM
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One Ostrich at a time....
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Join Date: Jun 2006
1,843 posts, read 1,468,247 times
Reputation: 402
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Housing market misconceptions
Heard on Fox News:
"If your house appreciates 50% over 2 years, and then the housing market drops 20%, you are still up 30%."
The scary thing is that I've heard this before.
Let say, for example, you purchased a home in 2003 for a modest $200,000. Through market appreciation, the house has gained 50%, or $100,000, giving your home a perceived market value of $300,000.
Now, lets consider that the market value of the home decreases by 20%, a conservative figure mentioned by many experts. So your $300,000 house depreciates $60,000, for a perceived market value of $240,000.
But wait a minute! When you take $240,000 from $200,000 you get $40,000, which is only a 20% gain from the original price of the home, not 30%.
My point is that some people do not take into consideration that the appreciation percentage of a home is taken from the original price, but the decrease is taken from the higher appreciated value.
Be careful when calculating the amount of equity you think you have, or think you may lose.
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10-25-2006, 05:39 PM
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Senior Member
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Join Date: Jun 2006
Location: Missouri
3,962 posts, read 4,220,961 times
Reputation: 1675
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The scary part is how bad we are, as a country, at basic math.
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10-25-2006, 05:42 PM
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Senior Member
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Join Date: Jul 2006
Location: back in Denver
6,952 posts, read 4,045,079 times
Reputation: 1261
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Quote:
Originally Posted by christina0001
The scary part is how bad we are, as a country, at basic math.
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unless you have a calculator!!!  |
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10-26-2006, 06:18 AM
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Senior Member
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Join Date: Aug 2006
Location: WPB, FL. Dreaming of Oil city, PA
2,909 posts, read 4,113,472 times
Reputation: 643
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I knew right away that it was 20%, not 30% I had a question like that on the IQ test which I got right.
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10-26-2006, 10:08 AM
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Senior Member
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Join Date: Oct 2006
2,564 posts, read 1,844,499 times
Reputation: 1175
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What amazes me is that people think they are "up" with home appreciation at all.
Unless you have a second home as an investment or are "house flipping", or if you plan to sell your house to live in a tent or walk the earth as a nomad, guess what happens when you sell your house - you buy a new house at the SAME APPRECIATED VALUE. People think they are millionaires because their home appricated 300% in the last ten years. Guess again, and remember your 3 fold increased property tax is negative equity to the extreme.
The only folks that home appreciation benifits are investors and real estate agents, oh and local governments with the property tax increases. Let the housing bubble burst!
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10-26-2006, 10:34 AM
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Senior Member
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Join Date: Jul 2006
Location: back in Denver
6,952 posts, read 4,045,079 times
Reputation: 1261
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I think it is a misconception that you can sell your home right now!! LOL
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10-26-2006, 04:50 PM
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One Ostrich at a time....
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Join Date: Jun 2006
1,843 posts, read 1,468,247 times
Reputation: 402
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Quote:
Originally Posted by Nea1
I think it is a misconception that you can sell your home right now!! LOL
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lol Good one..........................  |
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