Morgan Housel

A lot of people in that situation would say, I just made $300,000.

I've never seen that much money in my life, this is amazing.

But you didn't actually make anything.

Because if you sell that house for 600 grand,

you have to go buy another house.

And the price of that other house also doubled in value over the last 10 years.

That other house, if it's an equivalent house, also costs 600 grand.

You didn't make anything.

And so it's this illusion of getting wealthier, for existing homeowners getting wealthier.

But if you actually dig into it, it's just kind of a psychological trick.

They're not actually getting wealthier.

The only exceptions to that is if you sell and you relocate to a cheaper area or you downsize.

Then you can make money.

But most people do neither nor.

They're not actually doing that.

And so I think if you tie that all together, we are inflating the values of homes almost intentionally to keep current homeowners happy in a way that gives them the impression of getting wealthier even if they're not.

And we're doing that at the cost of younger generations who, because home prices have risen, can't afford to take their first step into it.

It makes sense to them.

It's not this nebulous stock market thing.

It's the thing you can wrap your head around.