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Sold home, bought new home for same price, improved my cost of living...what?

Submitted by morgancharles@e... on 18 February 2010 - 12:26pm

Hi... In primary home (under first change of home), I sell the home (ten years into the future), then at the same time buy another for the same price (and same insurance costs, maintenance, mortgage rate, etc.)

When I run the report, my 'living standard per adult' nearly doubles as a result. I assume that the price of the new home was in the same future dollars that the old home was sold for.

Does that, then, mean that the main reason for the doubled living standard increase was due to the equity I had built up in the original home?

Sounds logical, but seems magical to this non-economics baby boomer. Let me know if I'm misinterpreting something. Thank you.

‹ Rent Primary Home Why doesn't Home Value remain constant in today's dollars? ›
Submitted by Laurence Kotlikoff on 18 February 2010 - 6:42pm.
1

Hi, What you did in taking out a new mortgage is to take out and thereby spend some of the equity in your home. So it's not a surprise that your living standard goes up. Your estate should go down. Call me at 617 834-2148 if you have any questions. best, Larry

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