🚨NERD ALERT🔔
Using chatgpt I ran a breakdown of my home purchase to understand what actually drove my “gain” — separating house price movement, inflation, and mortgage effects.
I’m sharing this only to review how inflation impacts real estate, equity, and debt erosion. This is a simplified model, and I’m missing important real-world costs like mortgage insurance, maintenance, property taxes, repairs, and other ownership expenses.
On the bottom of the post I left the prompt if you would like to run numbers for your situation.
📌 My situation
Bought: $560K (2022)
Down payment: $28K (5%)
Current value: $640K
Mortgage remaining: $485K
Inflation since purchase: ~17% (Canada estimate)
What it looks like in nominal terms (simple view)
Current equity: $155K
Initial equity: $28K
👉 Nominal gain: +$127K
🧠 2. Real breakdown (inflation-adjusted economics)
Instead of just looking at price change, I split it into:
🏠 A) House performance vs inflation
Inflation-adjusted 2022 price: ~$655K
Current value: $640K
👉 Real house performance: −$15K
(so the home slightly underperformed inflation)
🏦 B) Mortgage inflation effect (debt got “cheaper”)
Original mortgage: ~$532K
Inflation-adjusted mortgage today: ~$414K
👉 Debt became ~$118K lighter in real terms
But part of that was paid down through income:
Mortgage principal paid: $47K
👉 Pure inflation benefit on debt: +$71K
📊 3. Final combined result (key insight)
🏠 Asset side:
−$15K (house vs inflation)
🏦 Liability side:
+$71K (inflation reducing mortgage burden)
🎯 Net effect from macro forces only:
👉 ~+$56,000 real gain
💡 4. Full picture (including my payments)
If we include everything:
Mortgage paydown: +$47K
Inflation debt benefit: +$71K
House underperformance: −$15K
👉 Total real wealth gain: ~+$103,000
🧠 Key takeaway
The house itself didn’t really “beat inflation”
Most of the gain came from:
leverage (5% down)
mortgage paydown
inflation reducing real debt burden
📎 Prompt I used
I bought a property on [purchase date] for $[purchase price] with a [down payment % or amount] mortgage.
My current home value is $[current value], and my remaining mortgage is $[current mortgage].
Please break it down into:
Nominal gain
Mortgage paydown contribution
Market appreciation
Inflation-adjusted value comparison
Real gain in purchasing power terms
Inflation effect on mortgage (debt erosion)
Final summary splitting real vs nominal wealth
Show clean step-by-step math.