City-Data Forum Housing market misconceptions (percentage, agent, millionaires, real estate)
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10-24-2006, 08:56 PM
 1,868 posts, read 5,367,200 times Reputation: 530

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.

10-25-2006, 05:39 PM
 Location: Missouri 6,046 posts, read 22,482,321 times Reputation: 5138
The scary part is how bad we are, as a country, at basic math.

10-25-2006, 05:42 PM
Quote:
 Originally Posted by christina0001 The scary part is how bad we are, as a country, at basic math.
unless you have a calculator!!!

10-26-2006, 06:18 AM
 Location: WPB, FL. Dreaming of Oil city, PA 2,909 posts, read 13,328,249 times Reputation: 1015
I knew right away that it was 20%, not 30% I had a question like that on the IQ test which I got right.

10-26-2006, 10:08 AM
 14,030 posts, read 20,248,369 times Reputation: 23566
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!

10-26-2006, 10:34 AM
I think it is a misconception that you can sell your home right now!! LOL

10-26-2006, 04:50 PM
 1,868 posts, read 5,367,200 times Reputation: 530
Quote:
 Originally Posted by Nea1 I think it is a misconception that you can sell your home right now!! LOL
lol Good one..........................
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