Real Estate Crash thread

[wooley12]

Stayed in an Air BnB in Ft Collins last week. Piece of shit, under maintained McMansion owned by a scammer who owned a few more. 5 BR sleeps 14. No hangers or deck chairs. ABnB is propping up the McMansion housing market but to what extent? 2 other houses on the Cul de Sac were unoccupied.

[spanky]

Yeah, it's really bad in NJ and Westchester. The market was still down to stagnant since the crash, and this tax bill has really hurt. And, like it or not, but this is the middle class getting hit.

Middle class more so. Households that were paying AMT prior to the tax law changes weren’t significantly impacted as they already had limited deductions.

[Stu Gotz]

After all is said and done, I am guessing the home values in my town will bottom at ~40% off ‘07/‘08 highs.

[ncskier]

by Allan Sloan Oct. 10, 5 a.m. EDT

Daniel Savage, special to ProPublica

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for ProPublica’s Big Story newsletter to receive stories like this one in your inbox as soon as they are published.

This story was co-published with Fortune.

Lamle’s model isn’t applicable to most people because it works only for taxpayers with a household income of at least $200,000 a year who paid at least $1 million for their homes. But the principle underlying Lamle’s model applies to everyone who owns a home or is interested in owning one. To wit: You calculate the tax-law-caused loss of value by figuring out how much a house’s price needs to fall for buyers’ or owners’ after-tax costs to be the same now as they were before the tax law changed.

“People buying large-ticket items typically focus on after-tax costs of ownership,” Lamle told me. “The amount that many buyers can afford is affected by limits on their financial resources. Therefore, as their tax costs increase substantially because of the loss of tax deductions, they have less money available to pay for homes and to take on mortgage debt.”

At the suggestion of one of my editors, I asked Lamle to use a modified version of his economic model to estimate the tax law’s impact on the value of a theoretical house in the New York City suburb of West Orange, New Jersey, purchased for $800,000 in 2017 by a theoretical family with a $250,000 annual income. Those home value and income numbers are very high by national standards — but middle class by the standards of large parts of suburban Essex County.

Real estate tax on that theoretical house would run about $28,900 a year, according to statistics from the New Jersey state treasurer’s office. That tax used to be fully deductible for federal tax purposes. Now, it’s not deductible at all if you assume that the house’s owners are taking the standard deduction on their federal returns. Or that even if they’re itemizing deductions, they’re paying at least $10,000 of state income taxes, which means they don’t get any benefit from deducting property taxes.

According to Lamle’s calculations, this inability to deduct real estate tax has reduced the home’s value by $138,720, assuming a 5% mortgage rate. At a 4% rate, the value loss is $173,400. (For the math and assumptions underlying these numbers, see his methodology below.) So if the family put up $200,000 — 25% of the purchase price — to buy the house, more than half of that investment has been wiped out.

Obviously, it’s impossible to prove that Zandi and Lamle are right about the impact they say the tax law is having (and will continue to have) on home prices, because there’s no way to gauge the accuracy of their numbers. But the logic is compelling.

Real Estate Taxes of almost $29k a year for a $800k property Fuck me! I will never say anything bad about what I pay in CA ever.

So when these tax cuts went into affect and it was framed as only helping wealthy people, is the rest of america supposed to feel bad for the supposedly non-wealthy 250k per year citizens in $800k dollar homes?
I mean more than half of them support Bernie and Warren, so whats the problem with paying more in taxes? Both potential candidates have proposed increasing the marginal tax rates at about the same equivalent on the income side of things at 250k per year. So you either deduct back the 29k you pay locally to reduce the federal side of things but pay more %, or pay a lower percent with less deductions.
Even people in poor old NC are getting pinched with having to take the standard deductions vs itemizing, but I fail to see that a good platform exists to convince the masses anywhere to help those of us lucky to make the numbers used in this study.
You can't harp on wanting to increase taxes on wealthy people and then cry when you can't see 250k per year and a 800k house makes you wealthy to at least 95% of the country.

[Benny Profane]

You've been in the woods too long. These are middle class families getting hit. The real wage slaves on the high end. Big consumers, but, hardly wealthy.

[ncskier]

You've been in the woods too long. These are middle class families getting hit. The real wage slaves on the high end. Big consumers, but, hardly wealthy.

Actually, you need to leave the area around upper Westchester and Greenwich CT and realize that quite literally 95% of americans don't make anything close to 250k a year and don't live in 800k homes. Not even remotely close.
I'd argue that the multitude of folks in all the post industrial cities in CT and upstate NY don't give a crap either. You're quite literally arguing that except for a small subset of geographic area of America that a W2 wage of 250k is middle class and a national tax policy should make accommodation for them.
It can't be more than 5% of the country in that bracket earning that much.
The real money doesn't care either. What they will raise a fit about is Bernie or Warren getting the nomination and the fear of elimination of loss carry forward, regular income tax on interest and other big money tricks.
I will guarantee your banking limousine liberals will not endorse a Dem candidate outside of Biden. Nobody wants to pay higher taxes at the end of the day.
Hence why Florida has overtaken NY in population.

[dunfree]

plenty of people pay higher taxes if they have more opportunity to make money. you know - kinda the reason why all those people were living in the high tax dumps in the first place? but then the jobs kinda went.

[ncskier]

plenty of people pay higher taxes if they have more opportunity to make money. you know - kinda the reason why all those people were living in the high tax dumps in the first place? but then the jobs kinda went.

I would. What I wouldn’t do is insult people and say 250k and an 800k house is middle class.


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[oldblue]

Actually, you need to leave the area around upper Westchester and Greenwich CT and realize that quite literally 95% of americans don't make anything close to 250k a year and don't live in 800k homes. Not even remotely close.
I'd argue that the multitude of folks in all the post industrial cities in CT and upstate NY don't give a crap either. You're quite literally arguing that except for a small subset of geographic area of America that a W2 wage of 250k is middle class and a national tax policy should make accommodation for them.
It can't be more than 5% of the country in that bracket earning that much.
The real money doesn't care either. What they will raise a fit about is Bernie or Warren getting the nomination and the fear of elimination of loss carry forward, regular income tax on interest and other big money tricks.
I will guarantee your banking limousine liberals will not endorse a Dem candidate outside of Biden. Nobody wants to pay higher taxes at the end of the day.
Hence why Florida has overtaken NY in population.

Those blue states support the the rest of the country (and don't get much in return):

Federal Income Tax Paid per Capita:

[glademaster]

I would. What I wouldn’t do is insult people and say 250k and an 800k house is middle class.


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That certainly only qualifies you for modest middle class standing anywhere in the Emerald Corridor, or most of California, or Boston, or the Denver/Boulder Metro Area, or greater Chicago, or Minneapolis, or Atlanta, or really anywhere that isn't full of critter-buggering white trash and actually has more than a handful of "morning shower" jobs.

[ncskier]

Those blue states support the the rest of the country (and don't get much in return):

Federal Income Tax Paid per Capita:

You also probably threw up in your mouth when mitt Romney said 49% of Americans don’t pay taxes.
If you make big money, pay big taxes. I pointed out nc flat tax and the regressive crowd came out with pitch forks.
All I’m reading is “rich people should pay more, but I want to move the goalposts to what qualifies as rich”
Are you proposing the deplorables you mention pay more?

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[dunfree]

I would. What I wouldn’t do is insult people and say 250k and an 800k house is middle class.

Ones earnings, the others consumption. The earnings are what a skilled professional couple can come close to almost anywhere in the US. The consumption, i.e. what $800k gets you, varys widely across the US.

[ncskier]

Ones earnings, the others consumption. The earnings are what a skilled professional couple can come close to almost anywhere in the US. The consumption, i.e. what $800k gets you, varys widely across the US.

I agree. Two college educated working couple combined can easily hit 250k. I am simply asking, do you think that 95% of Americans would consider 250k middle class?
I’d bet 95% of this board couldn’t produce a w2 of 250k for 2018.

[Benny Profane]

Actually, you need to leave the area around upper Westchester and Greenwich CT and realize that quite literally 95% of americans don't make anything close to 250k a year and don't live in 800k homes. Not even remotely close.
I'd argue that the multitude of folks in all the post industrial cities in CT and upstate NY don't give a crap either. You're quite literally arguing that except for a small subset of geographic area of America that a W2 wage of 250k is middle class and a national tax policy should make accommodation for them.
It can't be more than 5% of the country in that bracket earning that much.
The real money doesn't care either. What they will raise a fit about is Bernie or Warren getting the nomination and the fear of elimination of loss carry forward, regular income tax on interest and other big money tricks.
I will guarantee your banking limousine liberals will not endorse a Dem candidate outside of Biden. Nobody wants to pay higher taxes at the end of the day.
Hence why Florida has overtaken NY in population.

Florida has overtaken NY because millions of Boomers are going down there to die.

That money is middle class in a lot of places. Most Americans, the great middle class you speak of, don't have shit. They don't make shit, they work harder and harder to make small piles of no shit, and the future is bleak for them, because, again, they don't have shit, and probably never will. We now have a class of people who will have negative equity all their lives. The banks won. The middle class of the high earning blue states, and educated cities in red states, have whatever money is out there, and they are keeping the economy alive. The red states are blood suckers on the high earning revenues in educated places, and any kid with any sort of ambition moves to high earning places as soon as they can. That migration has drained the gene pool in a lot of unfortunate places for decades now, and that's continuing.

So don't think that NC makes any sort of meaningful contribution to the economy. Charlotte banks can operate from anywhere. Be happy you have a few decent college towns. Shame if the mountains and OBX went away, but, we can live without them.

Now, it's not as though New Yorkers and New Jersey people and Ct. ballers are happy about spending so much just to live well, but, you gotta do what you gotta do if you want a decent job and educate and socialize your above average kids well. Supply and demand. But, this is where the movers and shakers are born and raised. Not NC.

[Stu Gotz]

Jeez, Benny. That’s pretty harsh.

I’m a huge Northeast homer, but the foreseeable future of this country runs through Austin and Raleigh/Durham.

The NE needs to figure out how to leverage its educational excellence.

[Benny Profane]

We have water, we have great education, we have great medical care, lots of fresh water, a semblance of a mass transit infrastructure, a non threatening climate, fresh water, it's green, and, we have water.

[ncskier]

Florida has overtaken NY because millions of Boomers are going down there to die.

That money is middle class in a lot of places. Most Americans, the great middle class you speak of, don't have shit. They don't make shit, they work harder and harder to make small piles of no shit, and the future is bleak for them, because, again, they don't have shit, and probably never will. We now have a class of people who will have negative equity all their lives. The banks won. The middle class of the high earning blue states, and educated cities in red states, have whatever money is out there, and they are keeping the economy alive. The red states are blood suckers on the high earning revenues in educated places, and any kid with any sort of ambition moves to high earning places as soon as they can. That migration has drained the gene pool in a lot of unfortunate places for decades now, and that's continuing.

So don't think that NC makes any sort of meaningful contribution to the economy. Charlotte banks can operate from anywhere. Be happy you have a few decent college towns. Shame if the mountains and OBX went away, but, we can live without them.

Now, it's not as though New Yorkers and New Jersey people and Ct. ballers are happy about spending so much just to live well, but, you gotta do what you gotta do if you want a decent job and educate and socialize your above average kids well. Supply and demand. But, this is where the movers and shakers are born and raised. Not NC.

You’re obviously not as smart as you think you are and it’s painfully obvious you’re jealous of the movers and shakers.
This thread and what it devolved into wasn’t about ny and nc. I merely pointed out that regardless of where you live it’s insensitive and ignorant to define 250k as middle class.
Can you imagine Bernie Sanders standing in front of voters in 45 states and arguing that raising taxes on the rich doesn’t include people who make 250k. It’s a non starter.
Sorry you wasted your life and have ended up alone, poor and bitter. Hey at least the roads are paved well

[Benny Profane]

Like I said, you gotta get out of you dirt road holler and check out the world if you think 250 grand isn't middle class.
Your cracker politicians are the ones who fucked the people in places that actually pay taxes. Real smart. When this upcoming recession, which we are probably in, lasts a few years, you might be up here looking for income.

[VTeton]

Don't think this guy gives a shit if the stock market tanks.

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[ncskier]

Like I said, you gotta get out of you dirt road holler and check out the world if you think 250 grand isn't middle class.
Your cracker politicians are the ones who fucked the people in places that actually pay taxes. Real smart. When this upcoming recession, which we are probably in, lasts a few years, you might be up here looking for income.

I get the impression you’re poor for westchester. You feel bad about your career decisions and the fact you can’t even afford a home where you choose to live. I’m beginning to think you were some type of teacher or staff accountant in a leafy westchester suburb. All your peers have moved to Florida to collect their pensions and you are bitter being the third wheel at del boca vista.
Your family is all dead and you spend all day pontificating on national tax policy. In fact basing your solo travel adventures you don’t even have friends.
Good luck you bitter old fuck.

[glademaster]

In defense of Benny, traveling alone can be sublimely enjoyable. Sometimes you just can't think of anyone whose company is less annoying than your own.

[Benny Profane]

Homeowner, don't have to work, close to NE skiing, next to an airport that gets me to Denver or SLC easy, great road biking, good beaches close, NYC and everything it offers a commuter train away, no tornadoes, plenty of rain, no earthquakes, not too hot in summer, not too cold in winter, euro flights direct and cheap, I have a full mouth of teeth, as do most people here, drive paved roads, and hate fucking Florida. But, thanks.

Oh, and will have wonderful company next month for a month in Europe. Yeah, I'm poor.

[dunfree]

I agree. Two college educated working couple combined can easily hit 250k. I am simply asking, do you think that 95% of Americans would consider 250k middle class?
I’d bet 95% of this board couldn’t produce a w2 of 250k for 2018.

middle class in the US is cultural identity more than income.

for all the pretenses of poor bro-core around here it skews way richer and whiter and male than "average" and there are a number with combined income >$250k or close who've argued to raise their own taxes here. that may sound crazy, if you are a taxation is destiny believer, but it's true.

[jackstraw]

Those blue states support the the rest of the country (and don't get much in return):

Federal Income Tax Paid per Capita:

Interesting to see NH on that list considering how rural we are up here. Even as a per capita stat it is surprising.

Like I said, you gotta get out of you dirt road holler and check out the world if you think 250 grand isn't middle class.

250k is not middle class, but there are so many making much much more. So those folks make the 250k'ers look like middle class. It's all relative based on where you live and who you are exposed to when developing an opinion on this subject. Honestly, if I went by a gut feeling I might agree with you, but when you look outside the bubble (ski towns, cities, coastal) that many of us are in, you would realize 250k is a shitload of money.

[Benny Profane]

Ain't a shitload of money if it's already spent on essentials.