Future of Waianae? (2013, good credit, how much)

[pj737]

Originally Posted by hapci534

By "take the cash equity in the home" you seem to mean, get a bank loan, risking the loss of the home(s). To me that's a bad gamble. If you got through the 30-year mortgage gambit unforeclosed when the average job duration is now 7 years according to the Dept. Of Labor, that's already a miracle. Trying to do the stunt twice in a row is really courting disaster.

So sell the home, pay assisted living for a while then move to a cardboard box when the funds run out due to inflation? If I get to pick where I'm to be found dead, I'd pick my home, not a cardboard box.

While I agree taking on any debt without the ability to comfortably repay (regardless of the amount of home equity available) is always a bad idea. I completely disagree with your earlier statement that owners only get "poorer" from increasing home prices because of increased taxes.

If a home appreciates $100,000, the liability to the owner (on Oahu) is an additional $350/year ($29/mo); not $1,000/year as you stated earlier. I think all people, young and old, would agree that having $100,000 in additional home equity is well worth $29/mo. I can tell you with 100% certainty you represent the very tiny minority, if it even exists.

An elderly homeowner could sell his/her home, take the capital gains of up to $250K or $500K (single or married, respectively) entirely TAX FREE and downsize into a studio or a room in a care facility (not a cardboard box) and receive great treatment until one kicks the bucket.

Or he/she could use the capital gains in a multitude of other ways to benefit his/her final years on this planet.

To choose zero price appreciation over a tiny increased tax liability is, to put it bluntly, entirely ridiculous.

[whtviper1]

It's also important to note the $250K or $500K tax free on gains is unlimited with no strings attached as long as it was your principle residence 2 of the past 5 years. Hence, you can move out of your home - rent it for 2 years or a bit more, lock in more gains - and sell tax free / and the best part, if the next home appreciated while you rented the last home for a couple of years / you can flip again / and again / and again, etc

[hapci534]

The median cost for a nursing home room is $122,640 per year, pj737. 20 years of such managed care is $2.5 million at today's prices. Trying to stick that $2.5 mil bill to homebuyers might be a challenge when people in Waianae make $3K a month. If the buyer paid half of his $3K for your $2.5 mil mortgage, it would still require a 150-year mortgage. This "home value increase" game can be played only so far.

While you're out, looking for a Waianae buyer healthy enough to live (and work) for 150 years, your yearly "well worth" property tax would cost $8750 more per your math. So the picture I see is an unsellable Waianae property that costs $9K more each year. In my book this means being poorer. Perhaps this is why the Federal Reserve never called me for a job interview.

[pj737]

Originally Posted by hapci534

The median cost for a nursing home room is $122,640 per year, pj737. 20 years of such managed care is $2.5 million at today's prices. Trying to stick that $2.5 mil bill to homebuyers might be a challenge when people in Waianae make $3K a month. If the buyer paid half of his $3K for your $2.5 mil mortgage, it would still require a 150-year mortgage. This "home value increase" game can be played only so far.

While you're out, looking for a Waianae buyer healthy enough to live (and work) for 150 years, your yearly "well worth" property tax would cost $8750 more per your math. So the picture I see is an unsellable Waianae property that costs $9K more each year. In my book this means being poorer. Perhaps this is why the Federal Reserve never called me for a job interview.

OK, so let me get this straight... because nursing homes cost $100k+ a year on Oahu, homeowners should hope for zero home appreciation since whatever equity gains they realize will only cover a small portion of their lifetime care needs?

[hapci534]

My point was, one should not confound home ownership with retirement planning. Sometimes it works for that, but sometimes it doesn't. James Altucher is one of the better known figures who often writes about the downsides. How there are far better investment venues to make a profit that don't cause the next generation to leave town due to lack of affordable living space.

If everyone buys a house expecting to reap some huge windfall on the next mark, then a city is basically just a Ponzi scheme. Ponzis don't go on forever. Someone is eventually left holding the bag. Since the current upswing had its run since the 1940's...

[Mikala43]

I'll take the home appreciation please.

[whtviper1]

By its very nature: inflation + limited supply (small island) + high demand (growing population) means over the long run, practically all real estate on Oahu will appreciate over the long run, to suggest otherwise is kind of silly, just some areas will appreciate higher than others.

[Oahulife]

Originally Posted by hapci534

My point was, one should not confound home ownership with retirement planning. Sometimes it works for that, but sometimes it doesn't. James Altucher is one of the better known figures who often writes about the downsides. How there are far better investment venues to make a profit that don't cause the next generation to leave town due to lack of affordable living space.

If everyone buys a house expecting to reap some huge windfall on the next mark, then a city is basically just a Ponzi scheme. Ponzis don't go on forever. Someone is eventually left holding the bag. Since the current upswing had its run since the 1940's...

I like how you think. Your right eventually people are going to say "just how much is nice weather, beaches and the ideal of paradise worth?".

[Mikala43]

I think this is needed:

Ponzi Scheme' A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors

[pj737]

Originally Posted by Oahulife

I like how you think. Your right eventually people are going to say "just how much is nice weather, beaches and the ideal of paradise worth?".

Ask anyone in the eastern US right now what they think that's worth.

Year round near-perfect climate, stunning topography, pristine beaches, tropical landscape with exotic flora and fauna and well-developed tourist infrastructure in a very safe society (compared to other subtropical climates on the globe). You can't just build these things in other parts of the world - they are mostly naturally occurring phenomena. Simply put, you can't build or engineer near-perfect weather.

As humans evolve, we will always want to improve the quality of our life. Chasing the sun, clean water, clean air and temperate climates will only become more prevalent over time. There is no reason why more jobs won't move here over time as the global economy becomes more digital and data-centric.