Morgan Housel

And some of them, if they bought recently, might find themselves underwater and potentially owe more on the mortgage than the house is worth.

and people don't wanna go down that route.

Now I said, people feel wealthy when the value of the house goes up, but they're not actually wealthier.

And now I'll show you what I mean.

Let's say you buy a house for 300 grand, and 10 years later it's worth 600 grand.

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.