Home Equity is Not Savings

kitco ^ | 8/25/05 | Peter Schiff

[On the Road to Serfdom]

Yes, I agree with you, I was just making a narrow point about the economics of accounting for how much someone saves, not trying to justify borrowing against sudden unrealized gains.

In terms of someone's own house appreciation, instead of thinking of how to spend this new equity, they should consider instead how they will come up with the extra property tax money in the future. Unless they plan on moving to a smaller place or less expensive region, their housing costs paid for out of thier wages have gone up not down.

[stefan10]

I always ask myself how these people think and do their math. In the end it is the income and the debt burden that is important and not so much the value of a house when loans have to be payed. The value of a house helps to get a loan but it does not pay it back at least if you want to stay there.
It is a very interesting thing in the US that there is a property tax and this is rising with the price or value of a house.

Where i live we don´t have such a tax ( we got a lot of other taxes i can tell you). If you own a house you pay money to the local authorities for the infrastructure etc but that does not depend on the value of the house.

looking at the increases of the last years it must be a real cost factor in many areas.

But at the moment all this is not so important looking at these pictures from New Orleans and the whole region. This is unbelievable.