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... Some people will tell you that buying a home is wise because you get a tax incentive...
For those of us in the top income tax bracket, the itemized deductions at some point phase out.
However, there is a benefit to owning a home/condo & living in it (rather than renting it out for rental income): "tax free income in the amount of the fair market rental rate." It is largely an academic argument, and an argument that not everyone buys into - but in essence, from an economic perspective, you pay yourself rent when you own the condo & live in it. That is, of course, phantom income that doesn't show up anywhere and that you don't report to the IRS as income because, well, it is phantom. And, because it is phantom income, you don't pay income taxes on it.
I am going to disagree with my friend SK in at least a good part of his analysis.
The present set of numbers are compelling. The combination of low interest rates and low prices is unlikely to continue long term. We have an economy being driven toward at least moderate if not high inflation. Still is not happening due to the bad news offsetting the trend...but that won't continue forever. 7 or 8% mortgages will greatly change the economics. While I do not see a rapid rise in home pricing I would not be surprised to see substantially higher interest rates in the coming years.
I too would minimize the impact of taxes on the decision. The standard deduction is high enough that the first time home buyer should have only small, if any, impact from the mortgage deduction.
Note that in the span of a few years there may be risks to not buying. I would particularly worry about a restoration to rational pricing...a rise to roughly replacement value. A general economic up could well bring that about in a relatively sudden manner.
I only pulled out the above portion as written by OC not long ago to show how and why many folks do not understand the market. OC noted some very important data showing why home ownership is compelling now especially the wonderfully low interest rates being offered to qualified buyers.
HOWEVER, someone contemplating purchasing a house today must look at OC's comments and determine for themselves if they make sense. Ask yourself, if interest rates go up from today's under 5% rates to the 7 or 8 percent OC is stating what will happen to the price of homes?? If this is the case is there really an expectation of a general economic up turn which would suddenly bring real estate prices up while at the same time have interest rates go up 50% or more?? Would not the increase in interest rate make fewer and fewer folks qualify for loans?? Would we really see a sudden upturn in prices which could sustain itself for more than a few months?? All questions we must answer for ourselves but for this real estate investor I am sticking to what I have said all along. Low end housing with the potential for above market return positive cash flow good all others bad.
For those looking to live in their homes, raise their children and not move for 30 years then this may be a good time to purchase. However, data reveals this is just not the case for the overwhelming number of folks looking to buy which makes it important for all of us to make sure this home purchase of ours does not make us go under water.
Though we are being told how the economy is recovering where is the real signs of recovery with every day folks. All one needs to do is look at the massive take overs and conglomerates being formed to understand where all the economic improvements are coming from. Banks are making unprecedented returns, giant corporations are being bought and sold for billions and billions at amazing rates. Heck, Look at Deutche and see where they have their fingers and ownership and potential buyups to see this so called economic stabilization is not really a result of everyday folks making more income thus making them more qualified to obtain home loans.
Finally, real estate agents always state LOCATION, LOCATION, LOCATION.
The real question a person has to ask is based on the economic climate in the Vegas area or the potential for improvement in that economic climate soon, is Vegas and its outlying areas really the best Location for the majority of folks. Not my place to answer as it is person specific but if this area does meet your needs and does have some economic benefits to you then your only question is how much risk do you wish to take when purchasing a home or investment property. Make sure you analyze all the data properly.
The "bottom" in spring of 2008 was on volume not price as is clear from the following messages. And it was the bottom on volume. The spring 2009 bottom was on price and it was the price bottom and held well over a year. The price decline went from over a percent per month to about zero...that is a bottom.
The poll was an opportunity for those who wished to do a projection to do so. I thought we would do better. You I note did not contribute. That maintained your ability to critize regardless of the outcome.
More huckster snake oil. Potential homebuyers care about price action, not volume. There are dozens of queries in this thread asking if housing prices have bottomed. None of them ask if sales volumes have bottomed.
Your spring of 2009 bottom was another failure. Period. Your "prophesy" was that April was the bottom and that May would show a price increase. It did not. In fact every month for the rest of 2009 closed lower than your April bottom call. Your bottom call was the top-tick of the market for a full year. Median prices subsequently went on to fall 12% from your bottom call. You can put all the lipstick on this pig as you want, it's still a pig.
Your projection in your self created poll was wrong as well, but as I noted, at least your margin of error is shrinking. I voted in the poll created by another forum member that was created before yours. I think you're a fraud and I have no desire to participate in any poll created by you.
I only pulled out the above portion as written by OC not long ago to show how and why many folks do not understand the market. OC noted some very important data showing why home ownership is compelling now especially the wonderfully low interest rates being offered to qualified buyers.
HOWEVER, someone contemplating purchasing a house today must look at OC's comments and determine for themselves if they make sense. Ask yourself, if interest rates go up from today's under 5% rates to the 7 or 8 percent OC is stating what will happen to the price of homes?? If this is the case is there really an expectation of a general economic up turn which would suddenly bring real estate prices up while at the same time have interest rates go up 50% or more?? Would not the increase in interest rate make fewer and fewer folks qualify for loans?? Would we really see a sudden upturn in prices which could sustain itself for more than a few months?? All questions we must answer for ourselves but for this real estate investor I am sticking to what I have said all along. Low end housing with the potential for above market return positive cash flow good all others bad.
For those looking to live in their homes, raise their children and not move for 30 years then this may be a good time to purchase. However, data reveals this is just not the case for the overwhelming number of folks looking to buy which makes it important for all of us to make sure this home purchase of ours does not make us go under water.
Though we are being told how the economy is recovering where is the real signs of recovery with every day folks. All one needs to do is look at the massive take overs and conglomerates being formed to understand where all the economic improvements are coming from. Banks are making unprecedented returns, giant corporations are being bought and sold for billions and billions at amazing rates. Heck, Look at Deutche and see where they have their fingers and ownership and potential buyups to see this so called economic stabilization is not really a result of everyday folks making more income thus making them more qualified to obtain home loans.
Finally, real estate agents always state LOCATION, LOCATION, LOCATION.
The real question a person has to ask is based on the economic climate in the Vegas area or the potential for improvement in that economic climate soon, is Vegas and its outlying areas really the best Location for the majority of folks. Not my place to answer as it is person specific but if this area does meet your needs and does have some economic benefits to you then your only question is how much risk do you wish to take when purchasing a home or investment property. Make sure you analyze all the data properly.
FOD
Your posts take a little getting used to since they are long especially in these sound bite type of forums. But I appreciate your input.
I don't think anyone is arguing that its a bad time to purchase a home to live in in Vegas.
The substantial difference between current prices and even as much as a 25% drop in say the next 4 years is not much, if any since you'll still have to pay for a place to live. So $150K now vs $115K four years from now .....kinda a push. Esp considering interest rates. It would be substantially different if we are talking $600K vs $450K.
However, investements a whole nother ball of wax. Obv with cash buyers, mostly investors, running the market at the moment, realtors have a huge invested bias in perpetuating the myth of Vegas real estate as investment.
My assertion is really quite simple........theres currently too many houses. So some investors are not going to be able to sustain the rental amounts they project in their business plan. And some are gonna take it in the shorts. Most likely those least knowledgeable and with the least hands on experience....ie, ding a ling foreign investors who are listening to shysters in their native land.
The change in interest rate from 5% to 8% will lower the amount you can borrow per dollar of payment by about 27%.
An increase in interest rates from 5 to 8% will not significantly change price. The famed run up in interest rates in the 70s/80s when the rates pealked over 15% was accompanied by a price drop of less than 10%.
More huckster snake oil. Potential homebuyers care about price action, not volume. There are dozens of queries in this thread asking if housing prices have bottomed. None of them ask if sales volumes have bottomed.
Your spring of 2009 bottom was another failure. Period. Your "prophesy" was that April was the bottom and that May would show a price increase. It did not. In fact every month for the rest of 2009 closed lower than your April bottom call. Your bottom call was the top-tick of the market for a full year. Median prices subsequently went on to fall 12% from your bottom call. You can put all the lipstick on this pig as you want, it's still a pig.
Your projection in your self created poll was wrong as well, but as I noted, at least your margin of error is shrinking. I voted in the poll created by another forum member that was created before yours. I think you're a fraud and I have no desire to participate in any poll created by you.
I love seeing Olecapt fight when backed into a corner. He will not go down with the ship!
Lots of people are falsely optimistic during a bubble (including really smart ones). That is the whole point of a bubble - the majority of people are wrong.
I worked as an equity trader in the stock market during the first internet bubble 1998-2000 and there were lots of bullish traders who were geniuses one year and donkeys the next as they tried to buy every market "bottom". There were also contrarians shorting the markets who got wiped out by going short too soon.
One broker in particular I remember had huge short positions in a number of internet high flyers for months and was forced to buy the bulk of them back due to a margin call literally a week before the markets started heading south for good. He was right all along but he was still broken by the market action. I felt bad for him.
It is very difficult to predict market tops and bottoms. Lets give the OleCapt a break.
I, for one, would like to continue to hear his predictions. I will just make sure to balance them with other opposing ideas.
From its inception, this thread has chronicled the median housing price. The median dropped another 12% from your April '09 bottom call.
Quote:
The median home price is one of the most common measurements used to compare real estate prices in different markets, areas, and periods. It is said to be less biased than the mean (average) price since it is not as heavily influenced by small number of very highly priced homes. Real estate pricing - Wikipedia, the free encyclopedia
Hey, if the given data indicates you're wrong, let's find some other data to replace it!! Please peddle your fraud elsewhere.
Last edited by tony soprano; 03-08-2011 at 05:00 PM..
Reason: creative spelling
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Median prices subsequently went on to fall 12% from your bottom call. You can put all the lipstick on this pig as you want, it's still a pig.
