My House Has Gone Up in Value. Here's Why I'm Not Happy About It

Home values rose during the pandemic, but briefly began to fall in the second half of 2022 in response to rising mortgage rates. Prices have started climbing again in many parts of the country, though.

My house is one of the many that has gone up in value in recent years. This may seem like great news since, after all, who doesn't want to own a more valuable asset and have a higher net worth? In reality, though, I'm not actually happy that my home's value has risen. Here's why.

A higher home value means higher property taxes

There's a simple reason why I'm not happy my home has increased in value. The fact that it is worth more now is going to cost me money, and I'm not going to benefit in any meaningful way from the price increase for a long time -- if ever.

See, the added cost is going to come from a higher tax bill. Property taxes are calculated by multiplying your home's assessed value by the tax rate where you live. And, in many locations, including where I live, taxing authorities assess the market value of a property each year. So, since my home is worth more money, my property tax bill will increase.

While I'll be paying more, though, I don't actually have any more money right now just because my home is worth more. I'm not planning on selling -- and if I did, I'd just have to spend more money for a comparable property due to the rise in home costs where I live. So even though my home would sell for more, I won't get to keep more profits.

I'm also not planning on getting another mortgage loan to tap into the equity in my home since rates are really high right now, so it doesn't really matter that I have more value in the home. I can't access that equity in an affordable way.

All that's happened is more money will come out of my checking account. Many, many decades from now when or if I decide to sell, I'll get more for my home if values are still up -- and have to spend more with a mortgage lender to buy a comparable one at that time.

A higher home value only makes me wealthier on paper

Owning a home can help increase your net worth. And property appreciation is one way that happens. But unless and until you sell your home and are able to pocket a good portion of the profits, a house going up in value only makes you wealthier on paper. You have an asset that's worth more, but it's not like when your stocks go up in value and you get more money you can withdraw (or more money to earn interest that you can live on).

This doesn't mean you want your property values to go down, of course. But be careful about assuming that just because your house is becoming valuable that you're on track for financial success. You also need other investments that give you more easily accessible funds, too. Don't rely on your home price to rise to set you up for a secure future.