Real Estate Crash thread

[Mani_UT]

Varies wildly from neighborhood to neighborhood and even street to street. Had a weird CA-Prop-13 like standard made in 1995 and it general rises 3% a year from that...but like all good governments they find ways around that rule.

In general its ~1% +/- some variance. People in the Portland West Hills are more like 1.5+%.

You should see the income taxes!

Thanks. Quite familiar with the income tax living in Oregon (Hood River).
1.5% of property value would be insane. I definitely like the +3% max increase rule. I think it keeps neighborhoods from getting levelled and old houses getting replaced by macmansions as it would reset the tax level. My property tax on primary home is ~ 0.3% of value (old home).

[yeahman]

Unless we buy them houses ahead of time just like we save for college. That's what I'm doing (with my middle class lifestyle).

Okay, maybe we can help our kids. Especially if we cash in on the ridiculous value increase of our own houses. But this doesn't solve the problem of having a country where a huge percentage of the populace, i.e. those without generational wealth, have zero hope of ever owning a house. It didn't used to be this way, not that long ago.

Something has to give.

[sirbumpsalot]

Thanks. Quite familiar with the income tax living in Oregon (Hood River).
1.5% of property value would be insane. I definitely like the +3% max increase rule. I think it keeps neighborhoods from getting levelled and old houses getting replaced by macmansions as it would reset the tax level. My property tax on primary home is ~ 0.3% of value (old home).

Wow thats awesome! Its not like CA prop 13 in that the value resets everytime it changes hands or someone rebuilds....you build a new house it conforms to taxes for that neighborhood/street.

[sirbumpsalot]

Okay, maybe we can help our kids. Especially if we cash in on the ridiculous value increase of our own houses. But this doesn't solve the problem of having a country where a huge percentage of the populace, i.e. those without generational wealth, have zero hope of ever owning a house. It didn't used to be this way, not that long ago.

Something has to give.

Home ownership has been in the 60%+ range for 70 years now despite all the twists and turns. I have high hopes for the next generation to figure it out like the rest of us and our parents and grandparents did. People are fairly resilient and pragmatic.

[altasnob]

Starting pay at Target is now $24 an hour, nationally. Starbucks is $15. Jobless rates are ridiculously low. And with boomers soon dying, that will only continue. There's plenty of starter homes in the Tacoma area in the 350-400k range. The only reason housing seems so unaffordable in the US is because we insist on living sprawled out in giant, brand new homes, unlike the rest of the world.

If you really want to help your kid, get a rental property. When you die, and they inherit, they will get the home at a stepped up basis and can sell without any capital gains tax. You can do a cash out refinance on your primary home to get the money to purchase the rental property, and then the interest on the loan can be deducted from your rental income.

[liv2ski]

Starting pay at Target is now $24 an hour, nationally. Starbucks is $15. Jobless rates are ridiculously low. And with boomers soon dying, that will only continue. There's plenty of starter homes in the Tacoma area in the 350-400k range. The only reason housing seems so unaffordable in the US is because we insist on living sprawled out in giant homes, unlike the rest of the world.

If you really want to help your kid, get a rental property. When you die, and they inherit, they will get the home at a stepped up basis and can sell without any capital gains tax.

Now you have gone and done it. Last time I mentioned that they lost their collective minds. If you really want to help your kids out tell your parents to leave it all to your kids as they should need it way more than you do or you don't deserve it anyways.

[Supermoon]

If you really want to help your kid, get a rental property.

Sure. Cause everyone has $400k of disposable equity in their homes and want to have a second job for the rest of their lives, all while joining a class of people who are maybe more hated than any other profession.

Hopefully those parents will do the right thing and die quick so all that money doesn't go to hospital bills or nursing homes!

The only thing that is going to save future generations is making wages go up to their historic levels. Not this onesie/twosies shit that's happening now. It's probably too late for old millennials like myself to make up for lost time, but maybe at least our kids have a shot if we get our shit together. This is probably all for a different thread, but wages probably at least need to double to make up for the fact that AI is going to take half of the jobs in the next 30 years, so having two parents working isn't going to be possible anymore, and the US will probably go back to having a sole breadwinner for the family.

[Mani_UT]

Sure. Cause everyone has $400k of disposable equity in their homes .

On your first point, all you need is 100k, not 400. Rent will cover a good part of the mortgage; losses will lower your taxes overall. I'm not saying anyone can do it but a two-income family can probably pull if of with "normal" incomes.

The house market has been fucked for only about 3/4 years, Many could have bought before that assuming their finances were together. Maybe it's gonna be fucked for another 4 years, who knows. It's not that much time in the grand scheme of things. It's bleak at the moment but things change. Starting with real starter homes will help. They are out there.

[yeahman]

Buddy of mine who lives in Japan just bought an old home near Tokyo. Here's a tour for anybody who is interested. Pretty cool place.

[Supermoon]

Sure. But if starter homes lose half their value what does that do to the people in them now? Hoping for a recession is not good economic policy, IMO.

[sirbumpsalot]

Sure. Cause everyone has $400k of disposable equity in their homes and want to have a second job for the rest of their lives, all while joining a class of people who are maybe more hated than any other profession.

Hopefully those parents will do the right thing and die quick so all that money doesn't go to hospital bills or nursing homes!

The only thing that is going to save future generations is making wages go up to their historic levels. Not this onesie/twosies shit that's happening now. It's probably too late for old millennials like myself to make up for lost time, but maybe at least our kids have a shot if we get our shit together. This is probably all for a different thread, but wages probably at least need to double to make up for the fact that AI is going to take half of the jobs in the next 30 years, so having two parents working isn't going to be possible anymore, and the US will probably go back to having a sole breadwinner for the family.

Let me introduce you to Kentucky.....

[Supermoon]

Let me introduce you to Kentucky.....

Haha. There is always that.

[liv2ski]

I have said this before but I know about 5-6 families that bought rentals as much as possible and all are doing really well now. People hate landlords? Fuck em. Being a landlord is a pita, but over the long haul is a good investment IMO.

[Garbowski]

I always figured it could end up as a pain in the ass. I'm a good judge of character I think but you never know. I never have to deal with that at the brokerage. I'm sure the Mr. Money Moustache method or whatever is not too difficult to follow- though I guess the Bitcoin advice worked fantastic for a while too.

[altasnob]

I only suggested buying a rental to someone like yeahman, who has older kids, who I presume has been in his house a long time and consequently has a lot of equity sitting there. He suggested cashing in to help his kid when I thought he could accomplish the same thing by buying a rental property. He could even rent the property to his kid. The tax deducted interest is a big benefit to rental property where as most can no longer deduct interest from their primary residence loan becuase they take the standard deduction.

I wouldn't put all your eggs in the real estate basket. But if you feel you have sufficient money in stocks and bonds, and want more real estate exposure, a rental property would accomplish that. One downside of a rental property is it is your money gets stuck there, so to speak. You can always sell, but then you would have to pay capital gains and depreciation recapture tax. You can 1031 into a new property to avoid this. But then your money is still in a rental property. You can always do a 1031 and buy your dream retirement home you plan to die in. You'll need to rent it for 2 years to satisfy 1031 rules, but then can move into that and live there until you die (and your kids inherit at the stepped up basis). You can take a loan out on the rental property, but rates on rental properties are higher than rates on primary residence. So best to take debt out on primary residence to purchase rental property (interest tracing rules allow you to deduct this interest even though the collateral is not the rental). It is good to have a lot of debt on the rental property because the interest being deductible, and if you have it set up properly as an LLC, you can limit your assets and risk exposure (most don't set up and manage their LLC correctly, making it easy for a plaintiff's attorney to pierce the corporate veil; umbrella policy counters this). You just want to make sure the rental is cash flow positive, accounting for all the various spikes in costs that may occur.

The easiest, cheapest way to get into the rental business is to house hack. My friend has a walk out basement he is converting into an ADU. He's in Bellingham, which currently requires the owner to occupy the residence to make it a legal ADU. But ADU laws are being relaxed throughout the country. It is only a matter of time before the city ends that owner occupied requirement (then he can move out and keep the place as a duplex). Seattle allows two ADUs per property, on attached, one detached, with no owner occupy requirement. I see all jurisdictions going this direction over time. I believe if he rents his ADU for more than 3 years, and then sells, he will only be able to take the primary residence capital gains exclusion on the portion of the house that is his primary residence, and will have to pay taxes on the ADU portion (so be aware of this before you dive in).

I don't think mom and pop landlords are despised. In fact, it is quite the contrary. They are sought after. Everyone rather rent from the person who actually owns the house, and works on the house, than some faceless corporate landlord who has an army of MBA data crunchers maximizing their investment. For your first rental, I think it is best to buy extremely close to where you live and property manage yourself. You will learn the business, the tax implications, and your house, and then can outsource these tasks as you grow older. It can be a time suck, but depends on the condition of your property.

[Harry]

Starting pay at Target is now $24 an hour, nationally.

This is not true.

Typical altasnob post, 30 seconds on Target’s website shows he is way off.



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[altasnob]

Here's where that came from:

Low-Wage Jobs Are Becoming Middle-Class Jobs

Millions of low-income families are experiencing less financial stress and even a modicum of comfort.

"Last month, Target announced that it would pay new employees as much as $24 an hour and extend health benefits to anyone working at least 25 hours a week. The company is hardly the only one coughing up cash to lure in new workers or retain those on staff. Starbucks recently set a national minimum wage of $15. McDonald’s, Dairy Queen, and Subway franchises have been offering signing incentives. Lowe’s is giving bonuses to hourly workers this month."

https://www.theatlantic.com/ideas/ar...market/673277/

https://corporate.target.com/press/r...e-and-expand-a

What that article above explains is that because of pandemic stimulus hand outs and a tight labor market, for the first time in a long time the gap between the upper and lower class has shurnk. This is a good thing, and I would expect it to continue because boomers are starting to die, and there aren't enough babies or new immigrants to replace them.

There was an article in the Seattle Times the other day that talked about how all the tech layoffs in Seattle are big tech. Tech workers with 15 years experience, who were making 300 to 400k a year, were laid off and now have to work for 200-300k at non-tech companies, like Alaska Airlines. This isn't necessarily a bad thing. It is bringing down the upper class in Seattle and spreading the wealth out to other sectors.

https://www.seattletimes.com/busines...e-so-friendly/

[sirbumpsalot]

I have said this before but I know about 5-6 families that bought rentals as much as possible and all are doing really well now. People hate landlords? Fuck em. Being a landlord is a pita, but over the long haul is a good investment IMO.

Agreed, one slacker friend of mine put close to $1M into real estate over the last 20 years by scrimping/saving and gasp...living with ROOMMATES...retired at 52 with a multi-million net worth and clears $90,000 from rents after expenses and before taxes. Guy never made more than $100K a year in his career.

[Core Shot]

This is not true.

Typical altasnob post, 30 seconds on Target’s website shows he is way off.



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“As much as”

Yeah. No

But here, grocery stores start at $22
It’s fubar

And my electric bill is now $650. In winter with gas heat.

[east or bust]

Agreed, one slacker friend of mine put close to $1M into real estate over the last 20 years by scrimping/saving and gasp...living with ROOMMATES...retired at 52 with a multi-million net worth and clears $90,000 from rents after expenses and before taxes. Guy never made more than $100K a year in his career.

Does buddy have kids?

[Harry]

Last month, Target announced that it would pay new employees as much as $24 an hour

Key words = “as much as”





Here is the reality,
https://jobs.target.com/job/green-ba...18/45576945312



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[liv2ski]

And my electric bill is now $650. In winter with gas heat.

I wondered about that as my bill is $300 a month from SDG&E. The price of gas on that bill has increased 3-4 times from last winter.

[sirbumpsalot]

Does buddy have kids?

You've completely missed the point. Obstacles in your way to a goal are to go around/over/under. Anything else is an excuse.

[skaredshtles]

Fuck owning more than one house.

But I'm not a goal-oriented individual.

[californiagrown]

Obstacles in your way to a goal are to go around/over/under. Anything else is an excuse.

In todays society, its a reason to whine.