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Old 12-22-2018, 01:57 PM
 
Location: Paranoid State
13,047 posts, read 9,920,516 times
Reputation: 15595

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Quote:
Originally Posted by Deuterion View Post
Exactly. We are due for a recession in the next two years
There is little evidence of that. In fact, the evidence is the opposite: most of the leading economic indicators are extremely positive.

Quote:
Originally Posted by Deuterion View Post
and since Vegas thrives off people having disposable income it could be quite disasterous.
Many people have income streams immune to the fluctuations of the economy - both to visit and enjoy the entertainment of Las Vegas, but also to purchase 2nd or 3rd homes, or retirement homes, etc. Income doesn't have anything to do with it - it is an asset transfer.

Quote:
Originally Posted by Deuterion View Post

IMO if 2008 didn’t show you that home values and appreciation are volatile and without guarantees then nothing else will.
<sigh.>

The causes of the Great Recession trace back to the 1st Clinton Administration nearly 30 years ago-- specifically under Henry Cisneros, then Secretary of HUD, and the now-disgraced Roberta Achtenberg, then Assistant Secretary of the U.S. Department of Housing and Urban Development for Fair Housing and Equal Opportunity.

Roberta Achtenberg saw home ownership through the lens of social class. After all - that was her job title. She was supposed to root out and destroy violations of Fair Housing and Equal Opportunity.

Specifically, Achtenberg argued the idea that a home was more than a roof over your head - for many it was their principal source of wealth, and a job merely existed to pay the mortgage. Her observation was that low-income people, and specifically low-income protected minorities, were turning into a permanent underclass because they didn't own homes at the same rate as others farther up the economic ladder.

The train of home-ownership was leaving the station without protected minorities, and as the Fair Housing and Equal Opportunity czar, she wanted to do something about it.

So she did -- she rewrote regulations to twist the arm of mortgage originators to write mortgages to increase home ownership in the poor and minority communities by lending them money they couldn't afford to repay, and lobbying congress for what ultimately became the Financial Services Modernization Act Of 1999 which repealed many of the last vestiges of the Glass-Steagall Act so that mortgage originators could more easily securitize and sell off the alphabet soup of CDOs, MBSs, ABSs, etc.

We all know how that turned out.

There is a special place in Hell reserved for Achtenberg -- she caused massive misery across the world, all in the name of progressive left-wing ideals.


Quote:
Originally Posted by Deuterion View Post
People need to stop seeing home ownership as an investment, a single family property is a liability until you sell it or move out and rent it.
<Sigh.> The following explanation of the true economic value of home ownership may be too long for your attention span. But if you read it, I think you may find it useful.

The main economic benefit of homeownership is that you receive tax-free income in the amount of the fair market rental rate of the property. This is a bit of a weird concept, so let me explain it.

To see this, let's do a thought experiment. It is a bit convoluted, so please stay with me.

Let's say you and I are the same age. We attended and graduated from the same schools with the same grades and the same degrees. We work for the same employer in the same jobs with identical salaries. We have the same debts, and the same investments. Our marital status is the same. We purchased otherwise identical houses with identical down-payments and identical mortgages. In fact, our houses are immediately adjacent to one another and we are next door neighbors.

Now, let's imagine our respective IRS Form 1040s. Each of us has income that is identical, deductions that are identical, credits that are identical. Our total total tax obligation is identical. Our IRS 1040s are identical except for our names & addresses & SS numbers.

That is, in every economic way that matters, we are identical. Let's call this "the base case."

Please, stay with me. Hang in there. Let's show the "alternative hypothetical case."

OK, now let's imagine that instead of living in your own house, you become a landlord and rent your house to me. I become a landlord & rent my house to you. Each of us are both landlord and tenant. That's right, it is silly, but stay with me. Because our houses are otherwise identical, the fair market rental rate is the same -- let's say it is $3,000 per month. So, you pay me $3,000 in rent, and I pay you $3,000 in rent.

Now imagine our IRS Form 1040s in this "alternative hypothetical case." Each of us has the same income from our jobs as the base case above, but now each of us also has $36,000 of rental income, so our Adjusted Gross Incomes (AGIs) are now $36K larger than the base case. Each of us has some landlord expenses and depreciation expense. Just as in the "base case," your income tax obligation is identical to mine. BUT -- and this is an expensive BUT -- our respective income tax obligations in this "alternative hypothetical case" are now higher than in the "base case." We have more reportable income, so we owe more income tax.

So at the end of the day, each of us is worse off in the "alternative hypothetical case" because we pay the IRS income tax on the extra rental income (less some extra deductions). Our bank accounts will be worse than in the "base case."

So you can see that a major benefit of homeownership is that you "pay yourself rent" but this phantom income doesn't show up on a 1040. That is tax-free income.

Over a lifetime, this adds up. Housing prices will go up and down - but over a lifetime, adding this extra "tax-free" income to your worth is very significant.

 
Old 12-22-2018, 05:28 PM
 
Location: Henderson
1,052 posts, read 1,340,588 times
Reputation: 664
Kind of a long story but the bottom line is that if you live in a house that is paid for your economic prospects are considerably improved.
 
Old 12-22-2018, 06:38 PM
 
Location: California
201 posts, read 57,333 times
Reputation: 314
Quote:
Originally Posted by SportyandMisty View Post
There is little evidence of that. In fact, the evidence is the opposite: most of the leading economic indicators are extremely positive.



Many people have income streams immune to the fluctuations of the economy - both to visit and enjoy the entertainment of Las Vegas, but also to purchase 2nd or 3rd homes, or retirement homes, etc. Income doesn't have anything to do with it - it is an asset transfer.



<sigh.>

The causes of the Great Recession trace back to the 1st Clinton Administration nearly 30 years ago-- specifically under Henry Cisneros, then Secretary of HUD, and the now-disgraced Roberta Achtenberg, then Assistant Secretary of the U.S. Department of Housing and Urban Development for Fair Housing and Equal Opportunity.

Roberta Achtenberg saw home ownership through the lens of social class. After all - that was her job title. She was supposed to root out and destroy violations of Fair Housing and Equal Opportunity.

Specifically, Achtenberg argued the idea that a home was more than a roof over your head - for many it was their principal source of wealth, and a job merely existed to pay the mortgage. Her observation was that low-income people, and specifically low-income protected minorities, were turning into a permanent underclass because they didn't own homes at the same rate as others farther up the economic ladder.

The train of home-ownership was leaving the station without protected minorities, and as the Fair Housing and Equal Opportunity czar, she wanted to do something about it.

So she did -- she rewrote regulations to twist the arm of mortgage originators to write mortgages to increase home ownership in the poor and minority communities by lending them money they couldn't afford to repay, and lobbying congress for what ultimately became the Financial Services Modernization Act Of 1999 which repealed many of the last vestiges of the Glass-Steagall Act so that mortgage originators could more easily securitize and sell off the alphabet soup of CDOs, MBSs, ABSs, etc.

We all know how that turned out.

There is a special place in Hell reserved for Achtenberg -- she caused massive misery across the world, all in the name of progressive left-wing ideals.




<Sigh.> The following explanation of the true economic value of home ownership may be too long for your attention span. But if you read it, I think you may find it useful.

The main economic benefit of homeownership is that you receive tax-free income in the amount of the fair market rental rate of the property. This is a bit of a weird concept, so let me explain it.

To see this, let's do a thought experiment. It is a bit convoluted, so please stay with me.

Let's say you and I are the same age. We attended and graduated from the same schools with the same grades and the same degrees. We work for the same employer in the same jobs with identical salaries. We have the same debts, and the same investments. Our marital status is the same. We purchased otherwise identical houses with identical down-payments and identical mortgages. In fact, our houses are immediately adjacent to one another and we are next door neighbors.

Now, let's imagine our respective IRS Form 1040s. Each of us has income that is identical, deductions that are identical, credits that are identical. Our total total tax obligation is identical. Our IRS 1040s are identical except for our names & addresses & SS numbers.

That is, in every economic way that matters, we are identical. Let's call this "the base case."

Please, stay with me. Hang in there. Let's show the "alternative hypothetical case."

OK, now let's imagine that instead of living in your own house, you become a landlord and rent your house to me. I become a landlord & rent my house to you. Each of us are both landlord and tenant. That's right, it is silly, but stay with me. Because our houses are otherwise identical, the fair market rental rate is the same -- let's say it is $3,000 per month. So, you pay me $3,000 in rent, and I pay you $3,000 in rent.

Now imagine our IRS Form 1040s in this "alternative hypothetical case." Each of us has the same income from our jobs as the base case above, but now each of us also has $36,000 of rental income, so our Adjusted Gross Incomes (AGIs) are now $36K larger than the base case. Each of us has some landlord expenses and depreciation expense. Just as in the "base case," your income tax obligation is identical to mine. BUT -- and this is an expensive BUT -- our respective income tax obligations in this "alternative hypothetical case" are now higher than in the "base case." We have more reportable income, so we owe more income tax.

So at the end of the day, each of us is worse off in the "alternative hypothetical case" because we pay the IRS income tax on the extra rental income (less some extra deductions). Our bank accounts will be worse than in the "base case."

So you can see that a major benefit of homeownership is that you "pay yourself rent" but this phantom income doesn't show up on a 1040. That is tax-free income.

Over a lifetime, this adds up. Housing prices will go up and down - but over a lifetime, adding this extra "tax-free" income to your worth is very significant.
A lot of this is pie in the sky baby boomer nonsense mixed in with ad hominem attacks that had many home owners in hot water back in 2008. First off, leading economists know we are headed for a recession:

When Is the Next Recession? Survey of Economists Predicts 2021 | Money

https://seekingalpha.com/article/420...ession-bad-one

https://www.theguardian.com/business...ecession-comes

I was going to include excerpts but I want you to do your due diligence and see what the experts are really saying. Secondly, you can try to turn the economic collapse into a partisan issue but it wasn’t...it was government allowing corporate greed plain and simple. Doesn’t matter if it was Clinton or Bush or Reagan...it was a capitalistic engine on overdrive with no brakes and eventually we drove off a cliff. Capitalism requires regulation to function properly, when regulation is removed the system begins to eat itself alive like it is doing now. Furthermore, your hypothetical scenario is extremely rigid simply to make a point but does not reflect how things play out in the real world. You also were intellectually dishonest when you dismissed the benefit of deductions with the phrase “less some extra deductions”. Lastly, we have compare homeownership to something which is renting and in many cases renting is the better option especially in places like So. Cal. where the price of a single family property is ridiculously expensive. In many cases it makes more since to keep your money and put it in an actual investment vehicle. Not only do you have the potential for a higher return, you also have the flexibility of easy relocation, and you won’t be encumbered with a bad loan in the event of another economic downturn. Home ownership needs to stop being looked at as a type of familial graduation and looked at as a calculated risk. The only guarantee with a home is that you will have a place to live any other benefit is speculative.
 
Old 12-22-2018, 06:42 PM
 
Location: California
201 posts, read 57,333 times
Reputation: 314
Quote:
Originally Posted by bayview6 View Post
Kind of a long story but the bottom line is that if you live in a house that is paid for your economic prospects are considerably improved.
That ain’t really saying much of anything.
 
Old 12-22-2018, 07:04 PM
 
Location: Here and there, you decide.
11,726 posts, read 23,038,831 times
Reputation: 3983
Why is it that anytime the housing slows down, levels off, or has a seasonal shift, this board becomes a “the sky is falling” scenario and the negative Nancy’s come out? Seasonal shift and the higher interest rates are what is slowing the boom down. The prices that dropped are the over priced to begin with.

Put a decent house on the market for 275 and see how long it lasts.
 
Old 12-22-2018, 07:06 PM
 
Location: Southern Highlands
1,206 posts, read 774,079 times
Reputation: 1006
A lot of people are still bitter that they didn't buy real estate in 2010-2014.
 
Old 12-22-2018, 07:12 PM
 
27,543 posts, read 38,889,753 times
Reputation: 35655
Some people aren't happy. They like to drag others into their misery. They do this by:

Complaining non-stop about things that aren't important enough to complain about.
Create scenarios that try to make everyone as paranoid and miserable as they are.
Argue in circles incessantly in an effort to suck everyone else into their doomsday scenario.
Usually cite some flake website written by a guy in his moms basement. Basement man is usually over 25 and has never held a job.
When the "points" they are trying to prove get shot down by intelligent people who know what they are talking about they post fluff from more basement experts.
Ad nauseam.
 
Old 12-22-2018, 07:31 PM
 
Location: Henderson
1,052 posts, read 1,340,588 times
Reputation: 664
Quote:
Originally Posted by Deuterion View Post
That ain’t really saying much of anything.

Says more than saying you are receiving tax free income paying a mortgage.
 
Old 12-22-2018, 08:04 PM
 
Location: Las Vegas
35 posts, read 11,542 times
Reputation: 36
Quote:
Originally Posted by Tek_Freek View Post
Some people aren't happy. They like to drag others into their misery. They do this by:

Complaining non-stop about things that aren't important enough to complain about.
Create scenarios that try to make everyone as paranoid and miserable as they are.
Argue in circles incessantly in an effort to suck everyone else into their doomsday scenario.
Usually cite some flake website written by a guy in his moms basement. Basement man is usually over 25 and has never held a job.
When the "points" they are trying to prove get shot down by intelligent people who know what they are talking about they post fluff from more basement experts.
Ad nauseam.
Agreed.
 
Old 12-22-2018, 10:41 PM
 
Location: California
201 posts, read 57,333 times
Reputation: 314
Quote:
Originally Posted by Tek_Freek View Post
Some people aren't happy. They like to drag others into their misery. They do this by:

Complaining non-stop about things that aren't important enough to complain about.
Create scenarios that try to make everyone as paranoid and miserable as they are.
Argue in circles incessantly in an effort to suck everyone else into their doomsday scenario.
Usually cite some flake website written by a guy in his moms basement. Basement man is usually over 25 and has never held a job.
When the "points" they are trying to prove get shot down by intelligent people who know what they are talking about they post fluff from more basement experts.
Ad nauseam.
Well you have to have balance...prior to 2008 all we heard was the benefits of home ownership and it hit millions in the ass. We need both viewpoints and critical thinkers can then examine both and see where the truth lies.
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