Higher Down Payments not answer (million, income, mortgage, Maryland)

[Norm Barnes]

Le Roi
Home valuation is a result of a healthy investment. The residuals of home sales is what I believe the Fed and others are looking to accomplish. Homes Sales results in "Instant Stimulation". The owners look to: Improve, Repair, furnish and otherwise decorate a home and all of these purchases equates to jobs. The refinancing filled many tax buckets in that to refi we required the taxes to be up to date. Easing lending standards is about as far off the target as you can go -- You want to have good credit standards but minimize risk yet allow home ownership at a lower investment amount. The more that buy the better but not at a greater risk. The Home ownership cycle even if it as intervals from one home to another is an investment. If values go up income should go up or you have a pool of "home rich" that can't afford what they got. If income goes up radically then you have an inflated dollar and if you can remember the lire in a crisis you can imagine having to use a wheelbarrow to conduct business. The more homes sold the better -- if values stayed steady -- it could be a good thing.

[le roi]

Originally Posted by Norm Barnes

Le Roi
Home valuation is a result of a healthy investment. The residuals of home sales is what I believe the Fed and others are looking to accomplish. Homes Sales results in "Instant Stimulation". The owners look to: Improve, Repair, furnish and otherwise decorate a home and all of these purchases equates to jobs.

that is all malinvestment driven by policy.

just because people are spending money does not make it a good thing. some things are better to spend on, macroeconomically, than others. i thought we all learned that during the bubble.

[Norm Barnes]

le roi
Okay. People not spending doesn't mean they are saving or investing. Our economy is undermined in so many ways: Drug, Counterfeit tender, Undeclared income, and being private sector watchdogs, and gladiator to the world. If I have to bear all that I'd like to have a home as an investment with a snug little bed and for this I worked harder to get and keep. People with a mission in life accomplish amazing things. A home is just one of those major carrots that whether it be macroenomically or microeconomically provides us with a goal in life.

[le roi]

Originally Posted by Norm Barnes

Homes Sales results in "Instant Stimulation".

so does crack cocaine.

which I believe is a good analogy for using housing as a method of stimulating the economy. it is a wonderful short term high that dissipates after a little while, and leaves you wanting more stimulus.

it also has high opportunity costs. all that money and artificial demand that is wasted on housing, could've been used elsewhere that would create sustainable long term employment.

and of course, we already have too many houses that people cannot afford at their current prices, that are sitting, and rotting.

[Norm Barnes]

le roi
"High Opportunity Costs" -- The cost of passing up the next best choice. If not housing -- what then?
Zoning and Taxes paints us into a corner. Housing needs change as the "Mean Average" of the population ages. We were comfortable in a row to start and then a single with more bedrooms later as our needs change and now I like the possibility of moving in with the kids and grandkids and that would be a need for another different type house. You are aware that zoning often requires home remodeling to be approved and they have a bad taste for below grade remodeling to live in. The taxes are land rent and as you get older and payoff your home this trails along maybe as high as $350 per month and the benefits though huge here in Delaware County is seemingly too high to tack onto the purchase of a home. In Delaware Conty PA almost 33% of the total housing payment. My point is that some sit and rot because the taxes are excessive for what is provided and that housing needs and wants change from lifestage to lifestage. Utility obsolescence is my other point. When I think of investment in capital stock I also think of the Exxons, Wyeths, Insurance Companies, Banks and Health care stocks whose whole gain is based on pricing to the public that makes me think microeconomics stinks. What is the alternative I want to know?

[le roi]

Originally Posted by Norm Barnes

le roi
"High Opportunity Costs" -- The cost of passing up the next best choice. If not housing -- what then?

we let the players in the free market decide where to invest, instead of having the government push us to invest in housing.

that could be IT, Biotech, nursing, medicine, surgery. It could be trains. It could be nuclear. It could be geospatial. It could be pogo sticks.

Zoning and Taxes paints us into a corner. Housing needs change as the "Mean Average" of the population ages. We were comfortable in a row to start and then a single with more bedrooms later as our needs change and now I like the possibility of moving in with the kids and grandkids and that would be a need for another different type house.

You are aware that zoning often requires home remodeling to be approved and they have a bad taste for below grade remodeling to live in. The taxes are land rent and as you get older and payoff your home this trails along maybe as high as $350 per month and the benefits though huge here in Delaware County is seemingly too high to tack onto the purchase of a home. In Delaware Conty PA almost 33% of the total housing payment.

I'm not concerned about your local taxes and zoning. I am talking about federal influence on the markets.

My point is that some sit and rot because the taxes are excessive for what is provided and that housing needs and wants change from lifestage to lifestage.

If they were trying to sell them for $0, and couldn't give them away, then I'd see your point.

They aren't, so I don't. If you let values fall these homes will find owners.

Utility obsolescence is my other point. When I think of investment in capital stock I also think of the Exxons, Wyeths, Insurance Companies, Banks and Health care stocks

I didn't say anything about the goverment facilitating investment into large cap stocks, I don't know where you got that idea.

whose whole gain is based on pricing to the public that makes me think microeconomics stinks. What is the alternative I want to know?

The alternative is to get the government's big fat fingers off the markets, and let markets figure out what houses and property is worth.

[texdav]

That i8s exactly where Geithner and the administration has ended up. Taking the federal guarnateee out of most home fiancing and pacing it in the market palce to eliminate the risk to taxpayers .No risk equals sloppy mnagement of risk there is.Put homeowners in the game with some skin to lose on their decsion also.

[Norm Barnes]

le roi
"Sell for 0 not your point" "Don't care about taxes or zoning" "Government big fat fingers off market" "Investment in Cap Stocks"

Everything said is a matter of entitled opinion. I have no problem seeing the housing market search for its own level of opportunity without intervention. I do care about Real Estate taxes and zoning. Don't keep a pulse on this you wind up with blighted, drug infested, abandoned and ruined neighborhoods. Would you like me to sight you a few? Taxes should not be a deterrent to buy. Come on I do care that a $110K property has $3,600 in taxes. Educational districts have too much administration and drains resources. This money should be spent on quality teachers. Its ridiculous. You speak out voice your opinion and that's respected because it leads to dialogue and perhaps will touch upon a solution. But you don't care -- that's a pity -- because people who speak out on taxes in Real Estate is what we need in Delaware County PA. Government keep fat fingers off market - well then have fat pigs that lust in the light of dishonesty and thievery and achieve untold wealth because nobody is watching them be exiled. Do you want some examples? My question to you is where would you want to see the government take interest and invest? FHA, FNMA, VA and many of the others don't lend the monies -- they set the standards in regulations and guidelines. Private Market lenders do the lending. Are you sure you want them big fat fingers to stay in their pockets doing other things?

[MadManofBethesda]

Originally Posted by Norm Barnes

Review the tax code. 1040A standard deduction allowance can cause one to not consider home buying – tax and interest benefits are absorbed and though it does balance the paying field for homebuyer and renter the buyer advantage has gone or dissipated.

Originally Posted by Norm Barnes

Textdav
Main Categories of deductions on a Schedule A is Medical, Tax and Interest, Contributions, and Miscellaneous that isn't everything but its a large part. The Standard deduction for even a non-homeowner Married filing Jointly is $11,400. If you have a $180,000 mortgage your interest annually at 5.25% at the start would probably be $9,456 and taxes probable $3,500. Assuming you have a medical plan and no outrageous medical obligations. You may be able to come up with another $3,000 in deductions. This is about $4,500 less more than the standard deduction.

You're calculation and reasoning contains a major flaw with regard to homeowners who live in the 40+ states who levy income taxes. When I lived in Maryland, my state and county income taxes alone exceeded the $11,400 standard deduction. Therefore, the mortgage interest and property taxes that I paid each year were fully deductible from dollar one. As such, home ownership was much more advantageous than renting.

And the above doesn't even take into effect the appreciation that occurs over time. Upon selling my home (for hundreds of thousands of dollars more than I paid for it), I moved to Las Vegas last year and used some of the proceeds to pay cash for my new primary residence. Something that never could have occurred had I been a renter.

[Norm Barnes]

You are right. State Income PA at 3.07% or thereabout would be another $2400 for $80K or more. Investments over time usually have some breakout time where a profit can be realized save the last 4 or 5 years -- Jury still out on that. Thanks for the input. So if your earnings are in excess of $370K in PA your earned income tax will allow all of your other deductions attached to Real Estate, Medical, Contributions, etc. to be a positive factor. This of course will not be that rare of a case. I also believe in home ownership. I hate taxes levied at a municipal or county level and believe the tiered tax authorities causes overlap and wasteful spending. I think the standard deduction is fair but I believe that homeownership should be further encouraged and made possible by prudent lending with or without a down payment. Look at renters there are tons of them and their initial stake is 1 -2 months rent and most pay like clockwork. I can't statistically prove that its from the gut. In short we have to find a way to broad base home ownership with minimun risk, avoid sloppy lending, revive areas, and get Real Estate Taxes under control.