Rov_Scam
2hr ago
Right, but that equity is only useful if you're going to sell it, or you need to borrow money and can afford to make the payments. If I were to buy a $100,000 house tomorrow, and I make the kind of money for which the loan is comfortably affordable but not so much that I could comforably afford a house worth much more than that, being able to borrow $900,000 isn't much of an advantage. Maybe if circumstances change such that I need to borrow money and I can get a better interest rate on a HELOC than I would on a personal loan, but even then the origination fees combined with the fact that the bank now has a lien on your house makes it a questionable decision unless the circumstances call for it.
You don't even have to go back that far. The most recent appreciation in housing prices from the COVID era and renewed discussions on affordability directly stem from the wave of home purchases from the era of rock-bottom interest rates. It's basic supply in demand. Sale prices of homes are more reflective of mortgage payments than they are of the sticker price; it makes more sense to talk about a $1500/month house than a $250,000 house. This difference is especially clear in the Pittsburgh area, where houses just outside of Allegheny County command a price premium due to lower property taxes. If there's a class of people who couldn't afford a particular house at 7% but now can at 3.5%, the house is going to cost more.
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