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Mikala, property values have been going up for a long time in northern Nevada because of the Californians retiring here. I think the pandemic of course helped but prices are not in line with wages locally.
Bette, no one I knew could get a new house for 35k back then. We bought a fixer upper for 36k in 1980 that needed lots of work.
You say you want to leave TN, you’re able to do that with a job opportunity, yet you don’t want to leave.
So be more honest to yourself… if you’ve wanted to leave for years, and you can leave tomorrow and walk into a reasonable job, why aren’t you? It’s not a math problem, it’s something else.
There were a few problems with the job I wasn't comfortable with - it was largely working with big capital spend IT projects in an industry that is sensitive to downturns anyway. If the economy goes sideways, big project spend can easily be put on hold.
The issue is that mortgage rates are basically double what I have that's locked in. Prices are up across the board. Rents are probably up even more on a percentage basis.
I'd not only be paying more for the house, probably twice what I paid for mine for anything comparable, but financing it at a higher rate.
Quote:
Originally Posted by Clemencia53
What about the money you would make from selling your current place? Would that not help?
I'd probably have about $30k-$40k clear after selling my house.
I am comfortable in my paid-for country house and would prefer not to leave here. The property is supposedly worth about $500K and I bought it in 1991 for $63K. I have made some improvements, mostly a good 2.5 car detached pole barn type garage.
In the present climate of supply chain issues and labor shortages, a new build would be a very tough sell for me.
If I had to move on I would only buy an existing home for less than whatever I actually cleared after selling this place.
I live in a small city in northeast TN that has historically had very low property prices and reasonable property taxes. I bought a townhome for $96k in 2019 - PITI with HOA fees is around $700/month. My water/trash/sewer fees are $40-$50/month. There is no state income tax. My dollar stretches farther than you might think.
I've wanted to leave for years, and recently had an offer with ~$20k raise in SC. Looking around, anything to rent comparable to what I have now (2BR/2BA with garage) is at least double my current house payment, maybe pushing $800-$1000/more. State income taxes alone were an effective 6%. By the time I backed out the rent and the housing costs, the $20k was basically gone.
That's not even counting for the fact that I'm renting again, and back on that treadmill. I've never lived in that area before, so wouldn't want to buy immediately. With rising rates and record high prices, it seems like my dollar wouldn't go very far as it is, even buying. I'd be paying a lot more, probably not as much renting monthly, just to get something like what I have.
I feel stuck. Anyone else in this predicament?
Something to consider if you want to move.
When one compares income tax state vs no-income tax state they should take into consideration the sales tax rate and what are the exempt items as well as property tax rates.
Depending on your lifestyle - some people may save more money or break even in an income tax state like SC which has a lower sales tax rate with a number of exempt items- vs Tennessee- where one could “save” by not paying income tax but spend a lot of money on sales/use taxes - which is very high in Tn with very little meaningful sales tax exemptions
When one compares income tax state vs no-income tax state they should take into consideration the sales tax rate and what are the exempt items as well as property tax rates.
Depending on your lifestyle - some people may save more money or break even in an income tax state like SC which has a lower sales tax rate with a number of exempt items- vs Tennessee- where one could “save” by not paying income tax but spend a lot of money on sales/use taxes - which is very high in Tn with very little meaningful sales tax exemptions
I did a spreadsheet when we were looking to move in retirement. I was shocked a few times, like when I input data for WA and the lack of income tax was wiped out by the property taxes.
There are so many considerations to look at when you are moving strictly for financial gain.
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I live in a small city in northeast TN that has historically had very low property prices and reasonable property taxes. I bought a townhome for $96k in 2019 - PITI with HOA fees is around $700/month. My water/trash/sewer fees are $40-$50/month. There is no state income tax. My dollar stretches farther than you might think.
I've wanted to leave for years, and recently had an offer with ~$20k raise in SC. Looking around, anything to rent comparable to what I have now (2BR/2BA with garage) is at least double my current house payment, maybe pushing $800-$1000/more. State income taxes alone were an effective 6%. By the time I backed out the rent and the housing costs, the $20k was basically gone.
That's not even counting for the fact that I'm renting again, and back on that treadmill. I've never lived in that area before, so wouldn't want to buy immediately. With rising rates and record high prices, it seems like my dollar wouldn't go very far as it is, even buying. I'd be paying a lot more, probably not as much renting monthly, just to get something like what I have.
I feel stuck. Anyone else in this predicament?
Back in the day, as a hiring manager, I had to offer would-be employees a fair bit in moving incentives to relocate to high priced Silicon Valley. The package would typically include:
Full moving reimbursement for a name-brand mover such as United Van Lines or Mayflower Van Lines or the like. The reimbursement itself is taxable, so it would be "grossed up" so it paid the candidate's move plus any income tax on the reimbursement.
An interest rate "buy-down" on the candidate's new mortgage: Pay 3 percentage points of the interest during the first year relocated, 2 percentage points of the interest rate during the second year relocated, 1 percentage point of the interest rate during the third year relocated, and then nothing. This meant the candidates monthly payment was much lower in the first year, then somewhat lower the second, still lower the third, and then it was whatever the regular payment was. Of course, this too is taxable income, so we grossed it up.
A one-time relocation bonus to help in the down payment of a new house, registering vehicles, etc etc. I've forgotten how much but it was a big chunk of change.
A one-time bonus to compensate for the value of foregone stock options & foregone annual bonus at the candidate's old employer. This was a big number, and of course, we grossed it up to pay the taxes on it.
My point is all such things are always negotiable. Sometimes you have to get creative to get past HR policies - say, if they won't do an interest rate buy-down, have them pay for your utilities for 5 years in a row. Or something.
Last edited by moguldreamer; 07-19-2022 at 07:18 PM..
OP~
Mr. Powell is looking at raising the cost of money, again. By the end of July, he's talking 3/4ths% to 1 full percent. This may push loans into a 7ish% arena. Know what comes after that? Yup, 8ish percent. Then 9%, then 10%.
So. the prices should deflate some, since those interest rates will KILL the RE game.
When pricing deflates a bunch, then I become a buyer again...
About 1/3 of all home buyers don't bother with a mortgage. We pay cash. I haven't bothered with a mortgage since the mid 1990s on any of my properties. For those of us who don't bother with a mortgage, rising mortgage rates are not much of an issue. In fact, just the opposite can be true - because I'm an all-cash buyer with no mortgage contingency, my offer is even more attractive to the seller.
I did a spreadsheet when we were looking to move in retirement. I was shocked a few times, like when I input data for WA and the lack of income tax was wiped out by the property taxes.
There are so many considerations to look at when you are moving strictly for financial gain.
When moving in retirement, it's also important to look specifically at the income tax rules for retirees and not just the general tax rates because they could differ substantially. When we were considering moving from Florida to either Georgia (Savannah) or South Carolina (Bluffton/Hilton Head) earlier this year, I thought that we'd be stuck paying similar state income tax since the upper marginal tax rates are 5.75% and 7% respectively. Although it didn't factor into our final decision to buy a house in Savannah, I was pleased to learn that Georgia offers a significantly higher tax deduction/exclusion to retirees than South Carolina does. In SC, retirees 65+ get an income tax deduction of $15k/pp, so $30k for MFJ. However, in Georgia, retirees 65+ can each exclude up to $65k of retirement income (pensions, interest, dividends, capital gains, etc.), so a total of up to $130k, and that doesn't even include Social Security (of which neither state taxes). So retirees could end up excluding upwards of $150k+ in retiree income in Georgia, putting in closer to the no income tax state of its southern neighbor. And although SC's property taxes are lower than GA's, it's not enough to offset the taxation of an extra $100k in income.
In addition to income and property taxes, another thing to look at are insurance rates in the locality to which one's thinking of relocating. For example, in addition to my auto insurance rates dropping slightly, my homeowner's insurance is dropping by several thousands of dollars. I'm currently paying $7,850 annually for my HO-3 policy in Miami, but only a total of ~$3k for both my HO-3 and FEMA flood policies in Savannah. (We'll be living on a lake on an island.)
As you note, there are many considerations to look at when moving, even if you're not moving strictly as a financial matter.
When moving in retirement, it's also important to look specifically at the income tax rules for retirees and not just the general tax rates because they could differ substantially.
Very true, but often these benefits only apply to persons beyond a certain age, typically 65. Early retirees don't benefit. They may even get hit twice... pay full-throttle on state income tax, but not be eligible for ACA benefits (or even have to pay a state-level penalty, despite the federal one having been rescinded). The result may be staying put until one reaches a certain age, even if otherwise one is thoroughly ready to retire.
A similar thing applies to remote workers and others who have unconventional employment, who are looking for a tax-friendlier environment. Especially for higher income people, it's the top marginal tax rate that may be the ultimate criterion. Even if property tax or other fees/taxes are higher, having low or no state income tax can make a substantial difference.
how do you explain until late 1970s,you can get a nice big house for $35K WHEN rate was 10%-12%,with a 20% down?
Maybe not a nice big house, but a fairly decent little house for $35K, but I couldn't actually buy the house because I couldn't qualify for the mortgage with my salary that was $1.25 an hour, and that was a good job, not flipping burgers. The difference is that money was worth a lot more in the 1970s.
No I am not stuck here, but mortgages rates have nothing to do with it. I'm happy where I am and I don't want to move. If I did want to move, mortgage rates wouldn't affect that.
Last edited by oregonwoodsmoke; 07-20-2022 at 02:57 PM..
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