you would think the prices dropped on the new home they were planning on buying as well offsetting much of the decline. especially if going to those desirable areas like florida,arizona and nevada
I suspect if one is spending more (upsizing or moving to a more expensive area)... that may be the case. But downsizing is probably not.
Still... even with the downsizing ... it is what it is. I would not put life on hold too long or forgo plans unless it was no longer reasonable to do it financially.
Another comparison that is a little off, but shows the effect. Compare the value of the house (which deflated) against general inflation. If the money spent just compounded at the rate of inflation... there was a noticeable loss!
I did a back of the napkin analysis comparing the cost of our house + the increase in value today against the cost of the house (with general inflation applied) plus the money we spent on upkeep and maint plus property tax and insurance.
I was pleased to see (albeit probably not exactly accurate).... that there was no way I could have rented our home or a similar one for the value difference.... While that may not make the loss in value better. It sure beats coming to the conclusion... I could have rented the same house and saved $10k a year.
Fortunately our house did not lose enough value to be lower than what we paid for it. We are still in positive territory. A few years ago, I was thinking we will downsize and walk away from the deal with a fair amount of cash... and we still will cash out some money (but probably a little less than if we sold the house back in 2006).
But... I am looking at the upside. Whatever we cash out will not have taxes due. Plus our ongoing expenses (for the new place) will be lower. Since the house will probably be worth less (smaller size and less property) our property taxes and property insurance will reduce. Plus less cost to heat, cool, maintain, etc.
I am too busy counting my other blessing to dwell on it too much!