Yes there are significant transaction costs but it isn’t as though you are starting again with your housing equity.
Yep, and if you fell for one of your lender's incessant pitches on borrowing on your equity or refinancing and taking equity out, you're really locked in to your situation. I'm very convinced that most people doing home equity loans or refis with cash out don't understand how much they are backsliding when they do that.
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg...
https://www.calculatedriskblog.com/2023/05/housing-may-15th-...
The supply demand situation is probably even worse in high demand areas.
Those who refuse to sell now are just keeping up the price for the ones who do sell. If the price is not sustainable ot will go down.
Yes this is true, but only at this point in time when interest rates have shot up from historically low. Most of the time this won’t be the case, and soon this effect could work in the other way in that you could move to a house of similar value for a lower cost if interest rates come down.
And the 30 year fixed rate mortgage is unique to the US. Here in the UK, we only fix for 2-5 years typically.
So easy on the downvotes!
Right now US supply has shrunk so prices don’t seem to be declining enough to offset the rise in interest rates; the monthly payments for anything in the market are still eye-watering even factoring in price declines.
https://www.wsj.com/articles/low-mortgage-rates-home-sales-l...
https://ycharts.com/indicators/us_existing_home_sales
The situation may be different in other countries.
There's no way I can afford to move.
Are you aware that 30-fixed in the US is essentially gov't backed via three mega pseudo-gov't guaranteed orgs called Fannie, Freddie, Ginnie Mae? It is great for increasing home ownership and utterly oppressive to low income people renting. It is tough.
I cannot believe that more countries do not (politically) prioritise a similar system: Cheap, fixed 30-year'ish home mortgages. To be clear, I'm not saying this is economically ideal, but it is great for your political party!
If you started your mortgage before then its a neutral to positive rate-wise.
Even if you have significant equity in your house, the supply of "better" comparable homes is sparse at best.
And likely your existing mortgage is at a rate 1/2 of the current rates.
In California, Prop 13 means that property taxes are essentially fixed and nonincreasing at the time you purchase your house.
This is sometimes used as a defense of Prop 13, but all it really means is that any increase in total tax burden has to fall disproportionately (in fact, almost exclusively) on new purchasers and their tenants.
Forcing someone to relocate means giving up that privileged tax status and starting over "from scratch".
This is a ridiculous system, and there really needs to be property tax reform in CA, but it needs to be done in such a way that it doesn’t fuck over existing property owners, which is really difficult.
This is impossible. The current system is such an extreme and unsustainable transfer of wealth towards property owners that there's no way to create a sustainable (let alone equitable) system that doesn't involve current property owners giving something up.
Why is limiting government expenditure a goal in and of itself? If the government is able to raise enough tax money to support that spending, and voters agree with it, why shouldn't the government spend more?
Or maybe not, I have never negotiated relocation and the only industry I have to base an example off of is oil and gas and they pay ridiculous amounts of money so you get a comparable house/mortgage to your old one
I can't imagine a relocation package pricing in foregone tax benefits.
But even if it did, that's a one-time payment in exchange for giving up a benefit that exists in perpetuity. There are ways in accounting to discount the benefit of indefinite/perpetual annuities and compare them against current cash value, and in practice they almost always undervalue the former, often by limiting the future time window.
Your new interest rate is going to absolutely demolish any inflation benefit your current house has. I don't think people really understand how bad higher interest rates are when there's a housing shortage.
- A $500k house at 3% is $2,100/month.
- A $500k house at 7.5% is $3,500/month
- That's a difference of nearly $17,000/year
The house that was $500k at 3% in 2021 is still $500k at 7.5% in 2023. Housing prices haven't budged. We'd need to see a 20-40% reduction in prices across the board to stabilize affordability, but that won't happen because there's too much demand.
Remember, the day you buy a house, you are no richer. This is because the asset (house) is offset by the liability (the mortgage).
I buy a house with a $300k mortgage. The price rises to $500k. I then sell the house and buy another for $500k, rolling my $200k equity and $300k mortgage for no net change.
If you are trading up then yes, the more expensive house rose faster than your house. But that’s the case anytime you move and not unique to a job relocation.
I don't think anyone is crying about it but this is reducing labor mobility and slowing down economic growth. It's one of the unintended consequences of the Federal Reserve raising interest rates due to inflation.
We bought in 2007. Our house more than doubled in price since then. I’m not sure I could afford to buy it now if I was a typical 20% down buyer.
In your case (assuming $300K original house price) you will sell it for $600K, net $264K profits after commissions. Use profits plus $60K of original downpayment and any additional equity in the old house as a downpayment for a similar house at $600K. The new mortgage will be similar to one you had in 2007. Same rate and most likely smaller principal. Not a big difference.
The problem is that I'd be taking on a new 30-year mortgage while being about 10 years away from retirement rather than ~26 years away from retirement, which has certain implications on my ability to afford that mortgage over its full term.
Statistically very few people stay at the same house for 30+ years, most move within eight.
I don't have mortgage now, so no, I am not leaving money on the table.
This would only theoretically work going from a HCOL area to a lower one, and then moving again becomes even harder.
Are you living under a rock? Mortgage rates going up make that impossible.