Tax on real estate

[TR95]

Originally Posted by TheGreatCurve

"Not showing much on an increase from 1996 to 2002"? LOL

Too bad you can't read a simple graph.

Yes, people started buying more after the 1996 tax change. But these things take time for more and more people to first become aware of the change and then to realize how they can take advantage of it. And then you can only take the profits every 2 years so it's not like you can buy a new house every 3 months and cash out without paying taxes. So people had to wait at least 2 years before buying their next house. And as people see others making tax free money this way, more and more people jump in. That's why it takes time for momentum to build, it doesn't happen overnight. Did low interest rates later on also have an effect? Sure. But what triggered the whole thing was the 1996 tax law change. Real estate prices were flat to down for 6 years prior to that.

Sorry if you can't handle the truth.

You really can't follow your own chart, can you? Look at the same number of years (5 year period) from 1984 to 1989. The price is $150k in 1984 and $175k in 1989, that's a 16%+ increase. Now look at 1996 (the bottom of the market by the way) to 2001. In 1996 the price is about $160k and about $185k in 2001 (an increase of 15%+). So did the 1997 Tax Act impact the larger appreciation from 84-90? (I hear silence on the other end of the phone)....

People weren't flipping their primary residence every two years to take advantage of the capital gain change. People were moving up to better houses because they realized appreciation from the bottom of the market. See, it's called a cycle. Just as the 1997 Act has nothing to do with this latest increase from 2011 to now. We are in another cycle. So why hasn't the 1997 Act caused housing prices to increase back above the latest peak of $275k in 2006 then. It's been 10 years now. Why, because we had the largest crash in your chart's history and it will take lax lending standards again to get back above the peak. Right now, lending standard are unbelievably tight. The moment banks realize they need to loosen standards because of existing high prices and increasing interest rates, they will loosen to obtain more borrowers. You will see more interest only loans, more 5/1, 7/1, 10/1 ARMs that will be lower because the 30 year fixed will get back to 6% and people will not be able to afford the combination of higher prices and higher interest rates and they will be forced into these loans and the banks will then start the vicious cycle and the bubble will eventually pop, again.

Look, you fail to realize that there was already a tax law that you could defer the capital gains by acquiring another property. You fail to realize that interest rates were above 10-12% in the 80s. You fail to realize that interest rates were 7-8% through much of the 90's. You fail to realize that interest rates then declined to the 6%+ range in the 2000's. You fail to realize that lax lending standards began in 2001/2002 that really started the last bubble, NOT some 1997 Tax Law. There is not a sole in the world that believes for a minute that the 1997 Act triggered the whole bubble other than you.

Sorry, once again you have failed, so go cut a gold bar and try to sell it on the open market.

[TheGreatCurve]

Originally Posted by TR95

You really can't follow your own chart, can you? Look at the same number of years (5 year period) from 1984 to 1989. The price is $150k in 1984 and $175k in 1989, that's a 16%+ increase. Now look at 1996 (the bottom of the market by the way) to 2001. In 1996 the price is about $160k and about $185k in 2001 (an increase of 15%+). So did the 1997 Tax Act impact the larger appreciation from 84-90? (I hear silence on the other end of the phone)....

People weren't flipping their primary residence every two years to take advantage of the capital gain change. People were moving up to better houses because they realized appreciation from the bottom of the market. See, it's called a cycle. Just as the 1997 Act has nothing to do with this latest increase from 2011 to now. We are in another cycle. So why hasn't the 1997 Act caused housing prices to increase back above the latest peak of $275k in 2006 then. It's been 10 years now. Why, because we had the largest crash in your chart's history and it will take lax lending standards again to get back above the peak. Right now, lending standard are unbelievably tight. The moment banks realize they need to loosen standards because of existing high prices and increasing interest rates, they will loosen to obtain more borrowers. You will see more interest only loans, more 5/1, 7/1, 10/1 ARMs that will be lower because the 30 year fixed will get back to 6% and people will not be able to afford the combination of higher prices and higher interest rates and they will be forced into these loans and the banks will then start the vicious cycle and the bubble will eventually pop, again.

Look, you fail to realize that there was already a tax law that you could defer the capital gains by acquiring another property. You fail to realize that interest rates were above 10-12% in the 80s. You fail to realize that interest rates were 7-8% through much of the 90's. You fail to realize that interest rates then declined to the 6%+ range in the 2000's. You fail to realize that lax lending standards began in 2001/2002 that really started the last bubble, NOT some 1997 Tax Law. There is not a sole in the world that believes for a minute that the 1997 Act triggered the whole bubble other than you.

Sorry, once again you have failed, so go cut a gold bar and try to sell it on the open market.

It has. We are way above the last peak. It was $290K in May 2016:

https://www.census.gov/construction/...uspricemon.pdf

Sorry that you fail to see that there was almost no increase (inflation adjusted) from 1970 to 1996 but a massive increase from 1996 to today. And you should try reading the graph a little closer because your numbers are off.

[TR95]

Originally Posted by TheGreatCurve

It has. We are way above the last peak. It was $290K in May 2016:

https://www.census.gov/construction/...uspricemon.pdf

Sorry that you fail to see that there was almost no increase (inflation adjusted) from 1970 to 1996 but a massive increase from 1996 to today. And you should try reading the graph a little closer because your numbers are off.

You make no sense. Now you include some link that is the median of new home sales to make a point. This tells nothing, and not even sure if it is inflation adjusted. Nor do I really care.

Look, you can't use the bottom of the market in 1996 that just so happened to coincide with the Tax Act to make your case. It is extremely flawed. Then to say there was no appreciation from 1970-1996 again is flawed as we were coming out of the worst housing decline since the Great Depression. Of course, values are going to increase (Tax Act or not), just like this time around. Again, there was already a law in place that allowed for the deferral of capital gains if you rolled it over into another property. Most people weren't just cashing out and not buying so there would have been no capital gains paid anyway.

And since you used the census data. Here is a link that shows prices from 1940-2000. Wow, look the appreciation from 1970-1990 (almost 55%). From 1940-1970 (114%). You just have no clue what you are talking about here.

Historical Census of Housing Tables Home Values - Housing Topics - U.S. Census Bureau

Again, the last bubble was almost entirely caused by lax lending standards and low interest rates. The current bubble, if we are in one, is due to all the pent up demand, low interest rates and the fact that we just had the worst housing decline since the Great Depression. Very similar to the times when the bubble burst in 1989-1990. It's not rocket science, not sure why you can't comprehend this.

Why don't you add some value and actually answer the OP's question rather than complain and argue some nonsensical point that has nothing to do with the question. Still a little upset about not buying in 1998 and then again in 2012, I suppose. Can't be any other reason.