I found a lot to like about this article, however, the author would do well to more clearly distinguish between individuals and groups.
"While it is true that mortgage rates were higher, the rate of appreciation outpaced any interest expense, so the principle could be paid off long before the end of the loan’s term. They never actually paid that interest. They likely rolled their equity into numerous other residences, and maybe a couple vacation homes, while constantly refinancing to take advantage of the same cheap interest rates that ballooned the value of homes they never actually owned."
Unless you sell the home, you absolutely have paid that interest.
I bought my house 36 years ago and will likely never sell it. Price appreciation has done (and likely will do) nothing for me, except increase my taxes and insurance.
My original loan was at 10.5% -- and those mortgage payments came out of my paycheck and from no one else. High interest was a great motivator to pay off that loan early.
There is very little one can say about a group (homeowners) that is meaningful to an individual (homeowner).
Thank you for the comment. The generalization isn’t meant to downplay any individual’s merit. The point is that the rising tide of inflation lifts all boats. Homeowners then and now are able to utilize equity based off an arbitrary valuation that can counteract any interest paid. Inflation surely raises taxes and insurance but owning assets protects your purchasing power. Those who are priced out of homeownership will only face the negatives.
I found a lot to like about this article, however, the author would do well to more clearly distinguish between individuals and groups.
"While it is true that mortgage rates were higher, the rate of appreciation outpaced any interest expense, so the principle could be paid off long before the end of the loan’s term. They never actually paid that interest. They likely rolled their equity into numerous other residences, and maybe a couple vacation homes, while constantly refinancing to take advantage of the same cheap interest rates that ballooned the value of homes they never actually owned."
Unless you sell the home, you absolutely have paid that interest.
I bought my house 36 years ago and will likely never sell it. Price appreciation has done (and likely will do) nothing for me, except increase my taxes and insurance.
My original loan was at 10.5% -- and those mortgage payments came out of my paycheck and from no one else. High interest was a great motivator to pay off that loan early.
There is very little one can say about a group (homeowners) that is meaningful to an individual (homeowner).
Thank you for the comment. The generalization isn’t meant to downplay any individual’s merit. The point is that the rising tide of inflation lifts all boats. Homeowners then and now are able to utilize equity based off an arbitrary valuation that can counteract any interest paid. Inflation surely raises taxes and insurance but owning assets protects your purchasing power. Those who are priced out of homeownership will only face the negatives.