First, I know it fully well how bad the housing market here is.
Second, that's my point, unless it's an investment property or if you're selling and leaving the city altogether, you haven't actually earned $75,000/year.
Second, that's my point, unless it's an investment property or if you're selling and leaving the city altogether, you haven't actually earned $75,000/year.
Take two people X and Y, both have $500k in the bank. X buys a house with it, Y sticks to renting. A few years later, they want to move to another place with the same costs. X's house now sells for $1M and he is able to buy a new place for the same money, thus his new house effectively only cost him the $500k he had spent years ago. Y, having not bought a house previously, now has to pay $1M, which he does not have.
Yes, every other homeowner is sitting on the same gains, so relative to them, it feels like nothing has changed. But relative to the non-owners, you have been given a free handout of wealth. Which you are « consuming » by staying in the same house you were in before.
If the rent has gone up, then your house you live in is now producing 2600 dollars of value per month rather than 1700 (even though it feels like nothing has changed to you)
Yes, you have. You can take loans against your property value, for example. But even if you sell and put the money right back into another inflated asset, you still actually earned it.
The wealth is quite real - it just doesn’t feel that way since the experience of it doesn’t change