I've never felt "house poor" in the sense that we didn't buy a home we couldn't afford. However, our home used to make me feel poor simply because we had negative equity as underwater homeowners. A recent article by CNNMoney suggests homes prices are a barometer of personal wealth for a lot of people. Although that may have been the case before the housing bubble, I know I don't view my home as a reliable piece of my net worth. I think of it more as a car that I'll use for practical purposes. Like a car, I may trade it in for something newer or different. At the same time, my house doesn't make me feel poor anymore either since we are no longer underwater on our mortgage.
Being willing to spend more
According to the article, people are more likely to spend more money if they feel rich. They feel rich when their homes have a higher value. I don't think I am spending any more money now than I did when we were underwater on our mortgage. Our budget has remained fairly stable even though our house value fluctuates. At this time, our home is worth $130,000, which is far below the $183,000 we paid. I don't know if I'll spend more money if the value of our home ever returns to close to $200,000. By the time the value returns, we should have our house paid off. I'll be spending more when my mortgage is paid off simply because I have more money to spend.
Returning to positive equity
Certainly, I'm relieved that we have returned to positive equity in our home. I recently told a neighbor about the fact that we refinanced at an extremely low rate. We got into a conversation about how the original homeowners in our neighborhood are underwater on their mortgages since the subdivision was built during the housing bubble. I was almost embarrassed to tell her we aren't underwater anymore. When it comes to feeling wealthy, it's all relative. She might think I'm wealthy to have equity in my home, but I see my house a fairly neutral asset that helps us break even.
Getting to the real problem
Although my house isn't making me feel poor, I do feel poor for other reasons. I got a salary cut even though the prices of items at the stores are going up. Our paychecks are smaller because the government ended the payroll-tax holiday. The 2 percent hike in payroll taxes means I am working with less money in my budget. My source of financial angst has nothing to do with being a homeowner.
When we went to refinance our home earlier this year, I was hopeful our home would be appraised high enough so that we would not be forced to pay PMI or private mortgage insurance. Truthfully, the only time I'll think too carefully about the value of my home again will be when I go to sell it.
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