[lisper]

I'm not complaining about having to pay taxes per se. I'm mainly just pointing out that rising house prices are not an unalloyed good even if you own. In fact, appreciating house prices ONLY help you if you sell and don't buy another house in the same market. In all other situations, rising house prices actually hurt you, at least in California.

Specifically: the house I own is too big for me. I'd like to downsize. If housing prices were flat I could sell my house, buy a smaller house for less, reduce my property taxes, and only pay the transaction costs. But because my house and all the others around have appreciated, I can't do that. The smaller house I want to move in to costs more than the house I'm in when I bought it, so if I downsize my property taxes go up. Also, I have to pay transaction costs on a much bigger transaction plus pay the capital gains tax on a gain which I don't get to realize. The only way I win is if I move out of the area. But I don't want to do that. I like it here.

None of this would be a problem if prices were flat. It costs me more (a LOT more!) to downsize because the market is up. Hence an appreciating market is not necessarily good for you even if you own.