Housing Softening: MPLS Leads the Way in Price Cuts. (Brooklyn Park: fit in, to rent)

[marmac]

-------long term investment----

Many stories of woe in the real estate forum .

Many people did buy their home as a ---long term investment--but things changed .......job transfer, losing a job and finding one elsewhere in a different city etc

I don't have statistics, but would like to know how many years the average twin citian keeps the first house they buy.

[MN-Born-n-Raised]

Originally Posted by golfgal

Once again, you have confined your views to a few years in the market. So what if you buy a house now and it loses 2% next year, LONG TERM, you will see gains. How much did you lose in your 401K in 2008?? Should we all abandon those because they are down now?

I didn't lose anything in my 401K. I systematically pulled it all out over a 6 year period. The reason why people should put money in a 401K is to dodge taxes. The theory was that when you get older, you will be in a lower tax bracket. To me it's absolutely obvious that the tax rates are going European style here in the USA. So in actuality, you may be paying a lot MORE taxes on your 401K when you retire. I wanted my money to work for me today in something I could control. The result was I made fantastic gains in areas I knew very well (my company and real estate).

I took investment advice from my dog Sparky. Sparky said if you cannot pee on it, don't buy it.

Your 1st flaw in your logic is that Real Estate will always go up and outpace inflation. If 100 economists predicted Medtronic stock to drop by 8% by next year, would you buy that stock even if you assumed it would go up beyond the drop??

If you go into the purchase knowing it will drop and view it like an expense and you don't care if it drops $30K on that $400K property, who cares. I took a $14K trip to Alaska with my family. I didn't study the ROI. I also predict my home will drop $30K more in the next year. I'm not selling because I can afford the loss and it's a pain in the butt to rent after acquiring 20 years of "stuff".

But if you are renting now, it's a GREAT time to study the market and sit on the fence for a little longer.

[MN-Born-n-Raised]

Track. Didn't you mention a while ago you didn't rent because Uncle Sam would take too much of your money (you needed a tax deduction)???

Later you mentioned this:

Originally Posted by track2514

....Well we are never going to see eye to eye, because I don't mind paying taxes and if my tax dollars can help those less fortunate than me I think that is great. ..

I thought you didn't mind paying taxes?? Or is it that you don't mind when other people that you pay taxes. I'm just wondering...

[trackstar13]

Born and Raised

I am more than happy to pay my fair share of taxes and for me owning is a legal way to decrease the amount of taxes that I pay or get some value out of the place I live. If I were renting I would not be eligible for the rent refund that is provided by the state of Minnesota and I would not receive a deduction on my income tax. Nobody wants to pay more taxes than they have to within the system and not taking full advantage of your living situation is a personal decision. Some would argue you sacrifice flexibility for the tax deduction and I agree with this idea. Living in a house is not something you commit to for a year or two and then hold your hand out expecting a return. I have plenty of deductions due to my knowledge of the tax laws and experience filing my own taxes, but I still pay my fair share.

What bothers me are the people who try to exploit the system. For example, lets say a millionaire buys a farm in Andover and decides to develop this land as a large single family home development. Well maybe they get the streets paved and the sewers installed, but then they drag their feet for 10 years and never build a house on the property. Well if it is a recorded development and they keep paying taxes/business expenses every year with no gains (houses sold) they can take a big deduction for a business loss in addition to the regular deductions for owning the property. This has become a reality all across the country in recent years and the problem with the current tax system is it is too easy for the wealthy to hide their income. So in the previous example I gave you, the "real estate developer" is not doing anything illegal (well unless it is proven that the loss was on purpose, but this is very hard to do), but it is highly unethical. Also, this real estate market has allowed the rich to exploit both commercial and residential real estate as a loss to avoid paying taxes for several years now.

So yes I take the legal and in my opinion, ethical real estate deductions on my taxes. I am assuming based on your posts that you feel the rich should be taxed less since they will do the right thing with their money and stimulate the economy, i.e. trickle down effect. I tend to feel the opposite way and I believe the rich are often where they are because they manipulate the system and hire the best accountants so they do not have to pay their fair share of taxes.

[trackstar13]

Marmac

I agree that many people bought as a long term investment and things changed in a hurry. However, this is the same as any other long term investment. Most long term investments are gambles and some pay off, while others don't Lets say I buy a Blockbuster store since it is currently failing and I can get a great price. Maybe I think it will come back since movie rentals are up the past few years (I am making this up so don't hold me to this) and corporate is changing their business plan. Well my store might be the best investment ever or it may be out of business in a year. People need to look at houses like this and not buy more than they can afford.

I would also love to know how long the average person in the Twin Cities stays in their first house. If anybody has this information, please post.

Originally Posted by marmac

-------long term investment----

Many stories of woe in the real estate forum .

Many people did buy their home as a ---long term investment--but things changed .......job transfer, losing a job and finding one elsewhere in a different city etc

I don't have statistics, but would like to know how many years the average twin citian keeps the first house they buy.

[trackstar13]

Uh oh Born and Raised, it looks like the car industry announced they hired 55,000 people this year and they have already started repaying the buyout. This is a minor glimmer of hope and I will be back when there is more positive news. Go America

[MN-Born-n-Raised]

Originally Posted by track2514

Uh oh Born and Raised, it looks like the car industry announced they hired 55,000 people this year and they have already started repaying the buyout. This is a minor glimmer of hope and I will be back when there is more positive news. Go America

The car industry didn't announce it, the white house did. See http://www.dailyfinance.com/story/autos/white-house-the-gm-and-chrysler-bailouts-created-55-000-jobs/19574694/

Unless things have changed (and I hope it did) See

http://biggovernment.com/ngillespie/2010/05/02/reason-tv-how-did-gm-pay-back-its-tarp-loans-so-fast-well-it-didnt/

I have learned that you cannot trust a politicians numbers. Remember that the administration forgot to talk about the fact that the census workers were temps?? Speaking of temps. See http://www.autoblog.com/2010/06/18/gm-nixing-summer-shutdown-hiring-thousands-of-temps-to-meet-dem/


They too are hiring thousands of temps. Fuzzy math. Eventually, peoples cars will wear out (although citizens in Mexico have proven that you can keep a used car alive long after it should have been replaced).

We are in a new economy. In 2010 and beyond, I predict we will be getting by on less cars per family and people will wait longer to replace their cars. Our Prez is simply attempting to fix his sliding popularity. The Dem's are running from his "leadership". Remember last election?? No Republicans wanted to be associated with Bush??? Soon the Dem's will be saying "get off my side" to Obama. Politicians make the wrong decisions because they are attempting to win people over versus telling it straight.

[NewHomesGuy]

Originally Posted by track2514

Marmac

I agree that many people bought as a long term investment and things changed in a hurry. However, this is the same as any other long term investment. Most long term investments are gambles and some pay off, while others don't Lets say I buy a Blockbuster store since it is currently failing and I can get a great price. Maybe I think it will come back since movie rentals are up the past few years (I am making this up so don't hold me to this) and corporate is changing their business plan. Well my store might be the best investment ever or it may be out of business in a year. People need to look at houses like this and not buy more than they can afford.

I would also love to know how long the average person in the Twin Cities stays in their first house. If anybody has this information, please post.

On average, a person who is buying their first home will usually only be in that home for 3-5 years (if they can help it). Sometimes this is planned, and sometimes it's not. It all depends on what type of home they buy ~ size, location, # of bedrooms... A lot of times people just grow out of their first home within a short period of time. It's definitely not a "long term investment" as you put it (for that matter it's not even an asset) To look at your primary home as an investment/ asset is actually pretty funny. What are you trying to accomplish with this so called "long term investment" that continues to take money out of your pocket month after month??

[MN-Born-n-Raised]

NewHomesGuy. I just boosted your feedback.

[trackstar13]

Originally Posted by NewHomesGuy

On average, a person who is buying their first home will usually only be in that home for 3-5 years (if they can help it). Sometimes this is planned, and sometimes it's not. It all depends on what type of home they buy ~ size, location, # of bedrooms... A lot of times people just grow out of their first home within a short period of time. It's definitely not a "long term investment" as you put it (for that matter it's not even an asset) To look at your primary home as an investment/ asset is actually pretty funny. What are you trying to accomplish with this so called "long term investment" that continues to take money out of your pocket month after month??

I only said real estate was a long term investment, not a great long term investment or even a good investment. You basically have two options unless we get in to Co-ops, contract for deeds and all of that type of stuff. You can either rent or you buy a place to live. A house is not only a place to live, you can borrow against it, potentially sell it for a profit (or loss), use it as a tax deduction, etc. Renting is great and I recommend it for many people, however, it is not an investment. A house may not return every dollar that you put into it, but if you plan on living in it for a while and you play your cards right (right neighborhood, price, school district, etc.) you can end up leaving with some of the money you put into the house and spent on the mortgage. So when comparing renting vs. owning as a long term investment it is not pretty funny and you need to take it in that context. I would never buy a house hoping to get rich off of it, but I do expect to receive some return on my investment. Since you seem to be confused here are some simple equations that should explain it:

1) renting = flexibility
2) owning a house = long term investment

Finally, thanks for providing the information about how long a person lives in their first house. In my opinion this is too short and apparently people used to think this way, my grandparents built a house in 1929 and sold in 2006. It was their only house and they were able to use the proceeds to buy two retirement condos (one in Hilton Head, SC and one in Naples, FL). Oh and I am glad your not my agent because we would have a few issues. It is because of people like you that we had the recent real estate bubble.