How could anyone NOT think we are in a housing bubble? (purchase, property tax)
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The point is that one might be an "ultra high net worth individual", a millionaire in 1870 dollars, and it might still be prudent to NOT own a single square inch of soil. The buy vs. rent dilemma isn't just about affordability. It's about what makes financial sense.
What is your point - How is this at all related to what was being discussed about people being maxed out or not with current real estate purchases - did you not understand what it was about? Also buy vs rent is a different discussion and not really a "dilemma".
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Originally Posted by ohio_peasant
There are multiple layers of leap-of-faith. First is that the subject house isn’t a lemon. Inspections can only reveal so much. Minor matters are inevitable, and being minor, can be fixed. But foundation-issues for example are devastatingly costly to fix, but are easily hidden. Second is faith in the neighborhood… that it won’t decline. This isn’t always obvious, especially to people who don’t have children, who aren’t plugged-in to the schools, who don’t have a sensitive nose for the human-drama of neighborhoods. Third is faith that the cyclical nature of the market won’t hit the buyer out-of-phase. And fourth is a personal faith, that one won’t have to move soon, the life-situation won’t so change as to require a sale.
If the house never appreciated, then besides the carrying-costs we’d have the opportunity cost, where one’s money is tied up in the house, instead of in a more productive investment.
And as for the comparison with rent – please, are we still persisting in the liltingly risible fiction, that rent is somehow comparably to (or even higher???) than monthly costs of mortgage interest, taxes, insurance and maintenance?
Buying is not really "a leap of faith" anymore than any other major decision, you look at the data and decide. Let's get back to reality - your ideas of what risks are are really not for most homes and most situations. If the local market looks like it may be a bubble, then buy when it makes sense but waiting forever is just decision paralysis - while housing bubbles can cause price drops or stagnation - eventually they will recover, housing prices also may never drop.
You also completely missed out about why owning is better - rents may be a little lower than owning but a good part of owner costs are tax deductible, rents are not. Also after a few years, rents have increased (even if it was a bubble) but most house ownership costs remain fixed. It is not hard to compare those costs and projections and even if a property never appreciates (very unlikely) the equity being accrued is also worth much more than the zero value accrued from renting.
BTW - I have owned many properties in many states over more than 40 years - never lost a dime.
rents may be a little lower than owning but a good part of owner costs are tax deductible, rents are not.
Do many people deduct home ownership related costs anymore? When they ditched the personal exemptions and doubled the standard deduction it was predicted that the number of people itemizing would drop to under 10% of taxpayers. I'd be curious if that happened or not, but it might be that homeowners who actually deduct home related expenses are even more the exception than before.
Do many people deduct home ownership related costs anymore? When they ditched the personal exemptions and doubled the standard deduction it was predicted that the number of people itemizing would drop to under 10% of taxpayers. I'd be curious if that happened or not, but it might be that homeowners who actually deduct home related expenses are even more the exception than before.
Do many people deduct home ownership related costs anymore? When they ditched the personal exemptions and doubled the standard deduction it was predicted that the number of people itemizing would drop to under 10% of taxpayers. I'd be curious if that happened or not, but it might be that homeowners who actually deduct home related expenses are even more the exception than before.
Yes, there are far fewer of us able to deduct the double taxation of our property since the SALT cap was implemented.
What is your point - How is this at all related to what was being discussed about people being maxed out or not with current real estate purchases - did you not understand what it was about?
The point is that some people assert that houses have become unaffordable… or in other words, if they could afford it, they’d be buyers, right now… but they can’t so they won’t. OK, my sympathies to them. But I counter that even if you can easily afford it, it may still be foolish to buy.
Quote:
Originally Posted by ddeemo
Buying is not really "a leap of faith" anymore than any other major decision, ...
You also completely missed out about why owning is better - rents may be a little lower than owning but a good part of owner costs are tax deductible, rents are not. Also after a few years, rents have increased (even if it was a bubble) but most house ownership costs remain fixed. ...
BTW - I have owned many properties in many states over more than 40 years - never lost a dime.
In my current locale, the rent on a studio apartment is less than just the property tax on a smallish (800 sq ft) single family house in a mediocre suburb. So even if I got the house magically for free, COL is lower in the rental than in the purchase. And that’s before insurance and maintenance and the higher utilities of the house.
America is an intensely religious country! One of these predominant religions is Christianity. The other is owner-occupied housing. I’m not sure which of the two faiths is the more pervasive, or the more fervent.
BTW – I’ve owned an investment-house (briefly) and an owner-occupied house (for a long time), and lost money on both. That doesn’t mean that I’ll never buy again. But it does mean, that an owner-occupied house purchase, if and when it happens, will be treated as a personal indulgence, rather than a wise financial move.
Do many people deduct home ownership related costs anymore? When they ditched the personal exemptions and doubled the standard deduction it was predicted that the number of people itemizing would drop to under 10% of taxpayers. I'd be curious if that happened or not, but it might be that homeowners who actually deduct home related expenses are even more the exception than before.
According to the data - about 13.7% itemize but understand that currently over 50% pay no taxes so no need to itemize - of those that actually pay taxes, about 30% still itemize. The majority in higher income levels (household income above about $100K) most still itemize and over 90% itemize in the top income brackets even with the increased deductions and the reduction in SALT limits.
Our deductions are well above the current standard deductions even with about $15K excluded due to SALT limits.
The point is that some people assert that houses have become unaffordable… or in other words, if they could afford it, they’d be buyers, right now… but they can’t so they won’t. OK, my sympathies to them. But I counter that even if you can easily afford it, it may still be foolish to buy.
In my current locale, the rent on a studio apartment is less than just the property tax on a smallish (800 sq ft) single family house in a mediocre suburb. So even if I got the house magically for free, COL is lower in the rental than in the purchase. And that’s before insurance and maintenance and the higher utilities of the house.
America is an intensely religious country! One of these predominant religions is Christianity. The other is owner-occupied housing. I’m not sure which of the two faiths is the more pervasive, or the more fervent.
BTW – I’ve owned an investment-house (briefly) and an owner-occupied house (for a long time), and lost money on both. That doesn’t mean that I’ll never buy again. But it does mean, that an owner-occupied house purchase, if and when it happens, will be treated as a personal indulgence, rather than a wise financial move.
So the stuff about 1870 really didn't have anything to do with my post. But houses are not unaffordable in most of the country - more expensive places have more income in general.
Real estate prices varies by locations - but your comparison is nonsense because not at all similar propoerties. A studio will not meet most peoples needs but even then the rent will more than cover the taxes on that type of property - need to compare like sizes and types. The few available in my area ($1.5K-$2K/mo) would more than cover taxes, insurance and maintenance on a large house in a decent neighborhood. Where I am in CA, an apartment is about $2.5K/mo for 1Br - a small house rental is about $3K/mo in a bad neighborhood - in a decent neighborhood it is more like $4-5K/mo - you can buy a house for those amounts. If houses are increasing costs, rents will follow soon after - otherwise people would sell rather than offer for rent.
A house is not a personal indulgence - it is a place to live at a fixed expense level - well over 90% of house purchases cost less than rent over the long term (and even shorter terms most times). I have owned several rentals, always paid the costs and ended up with a gain in value also.
It’s always been a case of real estate is local.
Bidding wars over? Not here nor other markets I’ve been watching.
Even in the cooling areas, it's still inflated. They're just not having the absurd bidding wars. Sellers are pricing their homes at late 2021 levels and having to cut the prices to get offers now.
The entire country's housing market is inflated to absurd level from what I can tell. Once there is a recession and people start losing their jobs, I expect the foreclosures to come fast and furious. My old neighbor paid 720k for a house that was 375k in 2018. He could afford it because he and his wife both have good jobs, the interest rate was low, they had a downpayment of I think 150k range. So they are paying 3.5k+ a month. Well that's fine when they both bring in 4k a month each. But when one of them loses their job, the clock will start ticking.
I’d assume we are seeing less homes on the market. Who wants to sell a mortgage at 3% or less and get a new mortgage at 5+%?
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Originally Posted by redguard57
Rates are going to go to 8% soon. Can't see how that doesn't have an impact.
About 1/3 of homebuyers don't bother with a mortgage.
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