The Landlord Lens - The $35 Trillion Equity Lie: Why Homeowners Are Still Broke in 2025

Episode Date: May 5, 2025

Are you "house rich but cash poor"? In this eye-opening video, we delve into the paradox of rising home equity and its impact on your financial well-being. Discover how increasing property values might not equate to financial freedom, especially when faced with high mortgage payments, property taxes, and maintenance costs. We'll explore the broader implications of the housing market on personal wealth and financial stability.

The thing that irritates me the most about property taxes, the value of my house went up, but the services didn't change. Why did they get more revenue? Asset increase for them happened at their house and not at their stock portfolio. Well, suddenly costs are now way higher than incomes risen. It's just COVID's still here. Hey, everybody. Welcome. I am joined today by our CEO, Seamus and Landlord Extraordinaire.

Oh, wow. Thank you, John. Yeah, no problem. I like calling you a landlord extraordinaire. I don't know if I like being called one. No, it's a little more grandiose than your typical vibe. Yeah. But, John, we're going to talk about something that is a little different where we kind of have contentious opinions usually.

I think we're going to come together on this one, which is to talk about housing values, right? So do you mind kind of laying out what's the game on the field right now as it relates to housing values? Absolutely. And I'm going to talk about it in terms of just your normal everyday homeowner, not just the landlords, for whom. This typically is hitting them, you know, two, three times as much based on how many properties they own. But your typical homeowner today has either purchased in the last five years or has had their house for a very long time. In either case, the asset that they own has skyrocketed in value the last five years since it's current hit. Yeah.

Well, it's not all great. Especially if you're not cashing in on it immediately. Because if you bought this house, say 2012, whatever, and it's double. in price since 2012, which is very likely to have happened for a lot of people in the audience. Yes. That means also that your property taxes have doubled, and it means also that insurance, depending on where you live too, has probably also significantly increased because the cost of the land you live on is factored into your home insurance cost.

Okay. That's great about the asset value, but suddenly you're now incorporating into your mortgage payment if you're managing it through escrow or at least in your insurance payments or directly to the property to the city paying a much inflated property tax due to these asset increases. And for some people, this is extraordinarily onerous, is how I put it, very burdensome. Yeah, the term house poor, right? You said traditionally, I think, relate to somebody that had just purchased a house, right? You go to a housewarming party, you give them that gift.

I personally always bring toilet paper and paper towel because everyone needs it. And you're like, oh, congratulations, you know, part of the house poor club. Yeah. But the reality is with the huge asset price inflation, people maybe have owned the house for 20 years and are now feeling house poor again. Right. So those expenses have gone up. And some of the stats are really scary, honestly, in that people are having a hard time. paying their monthly bills, right, cash is getting tight to that extent. And the fact that they're

sitting on maybe $400, $500,000, $800,000 in equity in their house, it doesn't help them at all. Even though on paper their net wealth might look really strong, right? They're in a position where it's doing them no favors, actually. In fact, I think they'd prefer a lower housing value. Yeah, exactly. I think they would. Because how do you get that equity now? Is it, do you go in and try to get a helock on some of it. Do you go in and try to get a, you know, second mortgage on it? Or how do you access that equity? Well, those are all options, but now they're at 7%. And you've probably refinanced or unless you've bought in the last two years got a really good interest rate, right? And so it's not, it's very hard to access that equity now at a rate that you'd be happy

with. Yeah, I completely agree. An article we were reading recently, the quote in it was, people felt like because of the expenses to actually own the house where there's insurance and taxes that they were renting again. Yeah. Even though they had a primary, right? So very liquid. So what are some of the opportunities then as a homeowner that you actually have other than sit and suffer?

Yeah. Well, first I'd say is plan. Because if you're in a position where you're able to save and you know, you can squirrel away hundreds of dollars a month into like liquid fund bond something money market maybe you could save for a down payment for a second house and rent out that first one and then the cash flow from that first one because it's likely especially if it's a low rate that it's lower than the market rent where you're at may be able to contribute to that increased payment at that 7% loan you get for the next house I know a lot of people who have done this we've talked to a lot of users who have ended up

landlords because of this yep because it just doesn't doesn't make sense to give up that rising asset value if you can pay it off with with renter money, right? So that's one one big opportunity I think I'd point to. Yeah, in that situation, you can also have depreciation on that property now, right? So that helps from a from a tax standpoint and walking away from a 3% interest rate just does not feel good, right? And so I understand why people do that. In fact, the term golden handcuffs has come around to describe that exact situation where 3% interest rate is the gold, right? But you're kind of handcuffed to it from that standpoint.

That's probably an opportunity, though, that it's worth pointing out is not available to like everybody. There are going to be folks who are going to continue to sit and suffer to use the language you used. And I don't know how to solve it for them, right? It's like this long COVID impact of the housing market where we pumped so much money into the economy. and it largely landed on homeowners, right?

Like the homeowners became more rich in terms of their asset value. But for the people where that asset increase for them happened at their house and not at their stock portfolio, well, suddenly costs are now way higher than incomes risen. It's just, yeah, COVID's still here. Yeah, we're still getting bent over by COVID

is how it feels to me, John. But there are two other tactics that I think are worthwhile and things that everyone can go do right now without having $100,000 for a down payment on another property. Tell us shots. Well, the first is you can actually appeal your property tax increases. So that's some states that doesn't really work, right?

Some states hardly ever acknowledge those. But there are a lot of states out there where when you get that for me in Colorado, right? So that little postcard that says what your new assessed value is, you can actually appeal for that. So be on a lookout for that and try to appeal it, especially now. where we're seeing some housing prices drop a little bit or at the very, very least, plateau. And there's even companies out there that will help do that process for you.

And they only make money if you make money. We partnered with one called Onwell, kind of a free shout out to them. But they'll actually go through that appeal process on your behalf to lower that tax rate. And just remember, too, like taxes rarely go down. So appeal it on its way up because you're going to have a hell of a time trying to get it lower in the future. So that's one thing. The other thing that I recently went through the process of is just go out and look at what options are actually available from an insurance standpoint.

I was blown away the amount of money that I saved on both my primary homeowner policy as well as auto insurance, actually, by shopping around and just finding a much better deal. I'm one of those people that bought insurance back for my primary. Back when you actually walked into an office, you talked to someone, there was all of these expenses. And I didn't do a lot of shopping around then, right? It was just the same company that I used for my auto insurance at the time. And so that's another area where you can pick up some really crucial savings.

It's not going to go a long ways, but every little bit matters. The last thing I would just mention is be active in your local government, right? The thing that irritates me the most about property taxes is the value of my house went up, but the services didn't change. Why does city of Fort Collins in this case love living there? but why do they get more revenue, right? How come they get to take a bigger chunk from that perspective? And so I do think that for people out there that work in local government, there's probably

an opportunity for you to look at the people in your area and say, are there different policies and different reprieves that we could actually add so that taxes don't keep going up. And then as a citizen, right, be active, right? Be active in understanding how that local government. actually does manipulate the amount of money that's in your pocket in a very real way. Because I personally, before I owned a property, right, never voted in a local election, could honestly care less. Even owning my house in the 20 teens, right? It wasn't until I saw the prices of things like property taxes go up a lot that I kind of took interest.

Gotcha. Okay, so appeal your property taxes was another idea you had. Yes, sir. The other idea was look, shop around for insurance providers. Yep. Sorry if you live in Florida or California. It's going to be hard. Well, it's going to be easy because there might only be one and it might be terrible.

Yeah, it might be rough. And then the third there was get involved in local government, which makes a lot of sense because these price problem we're seeing. And I'm looking at your screen here with a crazy graph and we'll show it to you guys do. All that had to do with national policy, not local policy. So why can't local policy actually be on our side here and help us shield, especially the vulnerable folks that might be homeowners but are on a fixed income? How do we shield them from the impact of this national policy? I think it's a really good point. Yeah.

And then to look federal, I really hope the federal government does look at some things. Like if you look at college financial aid, right? Which looks at total net worth. And so that equity value have, once again, it's illiquid. You're not using it to pay for college. it's actually going to work against you. Yep. Right.

And so maybe there are opportunities from a federal standpoint to put pressure on things like local universities to lower the cost of education to help balance that out. I'm not wildly hopeful. But that's just another way that homeowners are getting bit in the ass from what was supposed to be a great thing, which is more equity value. Yeah. And for some people it is. You know, like there's some people watching this that are probably rolling our eyes at these

concerns. Maybe they sold a property that they bought in 2015 and upgraded. And then started living in a tent? That is the problem if you sold during the height, right? Well, yeah, but you know, if you moved, though, in the last two, three years and you're happy with the new house, these kinds of concerns probably sound silly because you opted into the property tax that you bought two years ago, right? It's a great point. And so, you know, sorry for you people, but there are people just getting kind of screwed by these asset price lifts.

It's funny talking about this because it's like, boohoo, my house. got more valuable. But like, yeah, it is a real boo-hoo situation. And I think it's important that somebody and more people talk about this because the type of person that's going to, you know, go to their local church, show up and say, I'm really struggling because my house got more valuable. Probably not expecting a lot of sympathy. And honestly, maybe they actually deserve it because it's getting hard to cover.

Absolutely. If you have other strategies, maybe that you've utilized in order to help with this problem or suggestions or other. data that shows how ridiculous this scenario has been. Maybe your property taxes have gone up like some places in Ohio by 100%. Please sound off in the comments. As always, we appreciate like and subscribe. TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry-leading tools and expert advice. Landlord better from anywhere for free at turbotenant.com.