Why You Feel Richer When Your Home Value Rises

In this episode, Lucas and Luna explore the 'wealth effect'—the psychological tendency to spend more when asset values rise, even if you haven't sold anything. They dig into a 2024 study by the Federal Reserve Bank of San Francisco showing that for every dollar increase in home equity, the average homeowner spends an extra 4.7 cents within two years. Lucas explains how this played out in the 2021–2023 housing boom, where rising home values boosted consumer spending by an estimated $180 billion annually. Luna questions whether the effect is symmetrical—do people cut spending when home prices fall? They discuss the 2008 housing crash as a counterexample, where the wealth effect reversed but with less intensity. The episode also ties in the current market environment as of June 2026, where home prices have plateaued after a two-year cooling. Lucas and Luna offer practical takeaways: don't treat unrealized gains as income, and be aware that your spending decisions may be subtly influenced by Zillow estimates. #WealthEffect #HomeEquity #BehavioralEconomics #ConsumerSpending #FederalReserve #HousingMarket #RealEstate #PersonalFinance #PsychologyOfMoney #UnrealizedGains #SpendingHabits #Macroeconomics #FinancialBehavior #HomeValues #FexingoBusiness #BusinessPodcast #MoneyMindset #Finance Keep every episode free: buymeacoffee.com/fexingo