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You are so misinformed or downright uninformed about tax laws and the economy in general that it would take me all day to try to explain it to you... so I won't even try. It probably wouldn't do any good anyway.
Property tax laws are local. They should have a higher rate of property taxes for 2nd and 3rd homes. And also remove any protection cap like California Prop 13 or Michigan proposal A if it is not primary home you live in.
In fact if it is primary home, allow new owners to have the low cap starting from 1995 or 2010 which ever is lower plus inflation and in California, 1978 price plus inflation so they do not have to pay much higher taxes if they actually live in the home.
Instead they just give a lower rate, but the property value cap is same whether primary or 2nd investment home ion both California and Michigan under Prop 13 and Prop A respectively.
And the Federal government could increase capital gains taxes on homes from 10% to way higher if they are 2nd and 3rd homes.
Keep the 10% capital gains tax on stocks and bonds and gold and oil and such.
But for homes they need to be better priced as a place to live is expensive enough already as it is even in 2010. They got to stop encouraging this obsession with runaway appreciation and start encouraging it as a place to live while striving to be rent and mortgage free ASAP while being able to do what you want with your home. Just have to pay the local county/city tax man.
Runaway appreciation like we had form 2000 to 2006 and from 2013 to present is just very very bad for today's buyers and future generation buyers. They will never be able to have a paid for home until they are in there 70s if that at the rate things are going.
Property tax laws are local. They should have a higher rate of property taxes for 2nd and 3rd homes. And also remove any protection cap like California Prop 13 or Michigan proposal A if it is not primary home you live in.
In fact if it is primary home, allow new owners to have the low cap starting from 1995 or 2010 which ever is lower plus inflation and in California, 1978 price plus inflation so they do not have to pay much higher taxes if they actually live in the home.
Instead they just give a lower rate, but the property value cap is same whether primary or 2nd investment home ion both California and Michigan under Prop 13 and Prop A respectively.
And the Federal government could increase capital gains taxes on homes from 10% to way higher if they are 2nd and 3rd homes.
Keep the 10% capital gains tax on stocks and bonds and gold and oil and such.
But for homes they need to be better priced as a place to live is expensive enough already as it is even in 2010. They got to stop encouraging this obsession with runaway appreciation and start encouraging it as a place to live while striving to be rent and mortgage free ASAP while being able to do what you want with your home. Just have to pay the local county/city tax man.
Runaway appreciation like we had form 2000 to 2006 and from 2013 to present is just very very bad for today's buyers and future generation buyers. They will never be able to have a paid for home until they are in there 70s if that at the rate things are going.
2009-12 saw price rollbacks in my city going back 20 years or more...
Homes here in East Oakland that sold for 500k in 2007 were selling for 100k in 2009...
Real Estate is cyclical and there are most definitely highs and lows.
Funny thing is my coworkers who were so bummed about not being able to buy a home 2006-07 bowed out of the marked as prices dropped... they still had the same nursing jobs but simply decided it was not a time to buy with few exceptions...
The single Mom that did buy said it was her best financial decision of her life... even her parents were against it.
She bought what she could afford... a bank owned property with issues. Her mortgage is less than what her rent would be and her home has more than doubled in value... Castro Valley.
For some in Oakland the prices are now 4 and 5 times higher than the low...
Well the IBM layoffs I mentioned show that tech is not immune...
Even the medical industry is not all propering during the pandemic, with dentists and doctors doing things like elective surgeries seeing a huge decline in business, although I imagine they should be able to mostly bounce back when (if) the pandemic ever gets under control.
And if those IBM employees aren't scooped up by another company within 3 weeks, there's probably something glaring in their history or skillset that's holding them back. The recruiters are out in full force looking to fill head count in tech right now, and myself and many of my colleagues are barraged by them on a weekly basis.
My point in all this is those aren't the people losing sleep over their futures right now. They're looking at this pandemic and any housing slowdown it causes as an opportunity, not a catastrophe.
Property tax laws are local. They should have a higher rate of property taxes for 2nd and 3rd homes. And also remove any protection cap like California Prop 13 or Michigan proposal A if it is not primary home you live in.
Many cities do. Some offer owner-occupied exemptions on a set amount of property tax, some tax rentals higher, and some are even proposing the idea of treating house flipping over a certain dollar amount with a substantial additional tax to bring it in line with income taxes.
Quote:
Originally Posted by Wolverine607
In fact if it is primary home, allow new owners to have the low cap starting from 1995 or 2010 which ever is lower plus inflation and in California, 1978 price plus inflation so they do not have to pay much higher taxes if they actually live in the home.
A few places do this, but it's a bad idea. It contributes to people never selling and further suffocates the inventory for new buyers.
Quote:
Originally Posted by Wolverine607
But for homes they need to be better priced as a place to live is expensive enough already as it is even in 2010. They got to stop encouraging this obsession with runaway appreciation and start encouraging it as a place to live while striving to be rent and mortgage free ASAP while being able to do what you want with your home. Just have to pay the local county/city tax man.
Runaway appreciation like we had form 2000 to 2006 and from 2013 to present is just very very bad for today's buyers and future generation buyers. They will never be able to have a paid for home until they are in there 70s if that at the rate things are going.
The government isn't encouraging this; people are driving the price up all by themselves. If you have something 10 people want and they're willing to outbid each other for it, nobody's going to say "now hold on, that's not fair" ... they're going to happily accept the extra money being thrown their way. If you really want to blame someone, blame marketing and psychology. Crap like HGTV and keeping up with the Jones' is convincing fools to spend and consume themselves into oblivion in the fruitless pursuit of social status.
I almost feel like you're proposing the government step in and regulate homes as if they were utilities. When you have countless families who are cash poor/house rich, such a proposal would be met with violent opposition. Some people literally have nothing of value except a home, and while I find that irresponsible, I'm also of the mind that it's not something that warrants punishment beyond the hole those people have already dug for themselves.
What is the saying when exercising...no pain, no gain?
As someone who lifts weights regularly, I emphatically agree about no-pain-no-gain. But here's the thing... even if I never scale the heights of world-class weight lifting, I receive the consolation-prize of better strength and more appealing physical appearance. My efforts may not be fully rewarded, but the partial-reward is appealing too. But with wealth-building, the effort/risk to strike it big, is often inimical to a more quotidian effort to become merely somewhat affluent. That's the whole rub! ... not that effort is pointless, but that ambition can get the better of us.
Quote:
Originally Posted by AndroidAZ
Being rich is not the end all, be all, but I choose to live my life by doing things that are relatively low risk, such as getting a mortgage. Over the long run, it's far less risky to be a home owner than being a renter. And if you buy the right home in the right area, you have control over how long to live there to sell when price is right, than sell and lose a ton of money. The risk is mostly imaginary. Some will get burned due to bad circumstances, most will be fine. That's life.
There's little argument, that residential house-ownership has advantage for many people, in many circumstances. Certainly a denizen of nearly any major American metro area would have been better off buying a house 20 years ago, than renting. Whether this is true for current prospective buyers, in places like LA or NYC, remains to be seen.
The broader point is whether most people are or are not suited to a concerted campaign of building wealth. I think that most are not. Most people overestimate their prowess, good sense or fortitude. Taking the lazy way out, might seem on first blush to be cowardly, self-defeating and outright execrable... a shameful loss of potential. And it may be. But there's a wisdom to it, too.
Quote:
Originally Posted by AndroidAZ
You might as well never marry, never have kids, never do anything worthwhile with this mentality.
Off-topic, but there's much merit to the consideration of never marrying and never having kids, especially if you're financially successful.
Many cities do. Some offer owner-occupied exemptions on a set amount of property tax, some tax rentals higher, and some are even proposing the idea of treating house flipping over a certain dollar amount with a substantial additional tax to bring it in line with income taxes.
A few places do this, but it's a bad idea. It contributes to people never selling and further suffocates the inventory for new buyers.
The government isn't encouraging this; people are driving the price up all by themselves. If you have something 10 people want and they're willing to outbid each other for it, nobody's going to say "now hold on, that's not fair" ... they're going to happily accept the extra money being thrown their way. If you really want to blame someone, blame marketing and psychology. Crap like HGTV and keeping up with the Jones' is convincing fools to spend and consume themselves into oblivion in the fruitless pursuit of social status.
I almost feel like you're proposing the government step in and regulate homes as if they were utilities. When you have countless families who are cash poor/house rich, such a proposal would be met with violent opposition. Some people literally have nothing of value except a home, and while I find that irresponsible, I'm also of the mind that it's not something that warrants punishment beyond the hole those people have already dug for themselves.
Well the government and banks like Fannie and Freddie have interest rates so low it contributes to the problem
I am not saying to socialize home prices, but make interest rates normal require 20% down minimum and you would not see so many people bidding up home prices because there would not be enough with the financial means to do so. If they had thopse requirements and home prices were still being run away in appreciation then unfortunately it would be just good old supply and demand with fair rules.
Prior to the late 1990s, things were more like 20% down minimum and normal interest rates of 6% or maybe more. And home prices really only went up slowly with inflation in most areas.
Starting around 2000, they made cheap and easy mortgages with almost like liar loans. That led to runaway appreciation and a bubble and a crash back to normal in 2008-2009.
Then they lower interest rates and continued to push them lower and lower even when homes were in short supply and prices started to rise too fast again. I mean they had interest rates lower than they were in 2009-2011 in 2014-2015 and even close to as low in 2016-2018 and lower in 2019-2020 with nosebleed home prices compared to higher mortgage rates with dramatically lower home prices in 2009-2010. Let that sink in and should tell you all you need to know.
And even though lending is a little tighter today than it was prior to 2008, still little money down is required and interest rates at record lows with record high home prices. Seems to be fueling another bubble to me. They even have subprime loans again.
And if those IBM employees aren't scooped up by another company within 3 weeks, there's probably something glaring in their history or skillset that's holding them back. The recruiters are out in full force looking to fill head count in tech right now, and myself and many of my colleagues are barraged by them on a weekly basis.
My point in all this is those aren't the people losing sleep over their futures right now. They're looking at this pandemic and any housing slowdown it causes as an opportunity, not a catastrophe.
Well again I think the bigger question is what the economy does. Are you saying you didn't know any "upper class" folks that were out of work for more than a few weeks during 2008-2011?
Well again I think the bigger question is what the economy does. Are you saying you didn't know any "upper class" folks that were out of work for more than a few weeks during 2008-2011?
Not in my circles. Most people got scooped up fast if and when there was a layoff. There was even one incident around 2011 where one company laid off some employees then tried to hire some of those layoffs back a month later to find most were already snatched up.
The mere hint of future unfavorable treatment is enough for some of us to let the poachers know we're "vulnerable" and they swoop in. I know a few who even like being laid off since they get to walk with 20+ weeks severance and have 3-5 opportunities in the wings by their last day.
The employment inequality in this nation is every bit as vast as the income inequality.
Well the government and banks like Fannie and Freddie have interest rates so low it contributes to the problem
I am not saying to socialize home prices, but make interest rates normal require 20% down minimum and you would not see so many people bidding up home prices because there would not be enough with the financial means to do so. If they had thopse requirements and home prices were still being run away in appreciation then unfortunately it would be just good old supply and demand with fair rules.
Prior to the late 1990s, things were more like 20% down minimum and normal interest rates of 6% or maybe more. And home prices really only went up slowly with inflation in most areas.
Starting around 2000, they made cheap and easy mortgages with almost like liar loans. That led to runaway appreciation and a bubble and a crash back to normal in 2008-2009.
Then they lower interest rates and continued to push them lower and lower even when homes were in short supply and prices started to rise too fast again. I mean they had interest rates lower than they were in 2009-2011 in 2014-2015 and even close to as low in 2016-2018 and lower in 2019-2020 with nosebleed home prices compared to higher mortgage rates with dramatically lower home prices in 2009-2010. Let that sink in and should tell you all you need to know.
And even though lending is a little tighter today than it was prior to 2008, still little money down is required and interest rates at record lows with record high home prices. Seems to be fueling another bubble to me. They even have subprime loans again.
In my local market, most of the purchases are either all cash or jumbo mortgages which require 20% down. I don't doubt there are parts of the country where it's 2007-ish all over again with people buying more home than they can afford with no down, but the data I see suggests that in the large urban centers and their surrounding suburbs, the root cause is that the upper class is pricing the upper-middle class out of the prime locations, so the upper-middle class then goes and prices the middle class out of their locations. The middle class who don't want soul crushing 2 hour commutes then have to beg, borrow, and steal enough to compete, so these buyers overborrow.
I don't disagree that lending should be tighter, and I'd personally be fine with requiring 20% down. It wouldn't affect my local housing market (which is already very high), but it might collapse some of the less affluent markets out there. While this seems the responsible way to go, it may cause more harm than good. I'm also not convinced it wouldn't create a chasm between the lowest-cost housing and luxury housing where the homes in the middle have a lack of qualified and interested buyers.
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