Real Estate Crash thread

[schuss]

Here’s what I’ve been trying to say what I think would be fair. You all might not agree and I may be called reprehensible. It’s not about prop 13 either. I’m using myself. I started working at age 16 so when I retire at 65, I will have paid in to Medicare and Social Security for 49 years. So far, those taxes have been a % of income with SS capping at a certain level because the benefits also cap in retirement. As long as I’ve earned, I have paid state and federal income tax. That will continue as long as I earn because I’m still receiving for which I can use as buying power. Depending on retirement savings and how I access them, I can be taxed on the withdrawals. That is okay because I may not have paid taxes on those earnings ever until withdrawal.

I bought my house at 23. I know things can change and I may move but my plan is to retire here. I will have paid property taxes on my primary and only house at 65 for 42 years. At 1.5% of value, with value increasing, the first 20 years of taxes have increased to 1100% of original.

I feel that if I’ve paid into my community for 42 years, I’ve probably paid my fair share especially if the upward trend of value of the home continues. I will have paid factors over what was paid for the property. Yes, is the property more valuable, sure. I stand by to access the value, you have to give the property away.

With the increase of people, I’ve seen the services my community provide go down. I wouldn’t expect to move to a new community and not pay property taxes because I’m old at over 65.

I’m not saying my benefactors should not pay the going rate for taxes when they inherit it. I’m not saying I shouldn’t pay a fair an increasing rate while I’m still able to work and earn an income. I’m not saying income generating properties shouldn’t pay market rate.

What I am saying is that telling someone that’s paid in for over 40 years at an inflating rate to either give away ownership of their home to stay or sell and leave because “they’re rich” with home equity is silly to me. Also silly to think that if there is even SS when I get to retirement, it won’t cover my property taxes to live in my own 1,600 sq ft home.

Maybe I’m reprehensible or maybe I don’t see how it’s my duty to increase supply because someone wants to live where I’ve carved out a modest life for myself.

/end rant

This is a super common sentiment, and thoughts hinge largely on a single thing: do you consider your taxes an investment or capital payment or just variable cost paying? Typical municipal budgets use taxes to pay for continuing consumptive costs and payments on capital (either debt/bond issue or accumulation for purchase depending on area). Do you expect lower electric rates because you've paid them for years? Lower cable bills? Perhaps, but more likely not. I will agree that long term residents are preferable, but in the modern era movement is often required for job/pay improvements and other factors. Not to mention that given it's more accepted, people do it more often.
Your thought is the town or city "owes" you something, but from their point of view, you've paid your share of continuing expenses (perhaps a bit more as you don't have kids).
Now, I'd say neither point of view is exactly on in terms of fairness or equity. Ideally we'd be able to meter taxes by public service contribution etc., but that's way too prone to fraud so it would never happen.
The reality is you've paid the consumptive costs and expect a break on them in the future as you've paid them in one place for a long time. I'd recommend you reach out to your city council or elsewhere to put in place legislation that allows for breaks if taxes exceed income and assets for people who have paid in 20+ years. It would likely pass.
That said - you have an appreciated asset that is, in fact, worth a ton. You have options to reverse mortgage that asset to pay future consumptive costs, sell it and use the assets to pay for rent/stuff (could even do a leaseback until death) or any other number of options. The idea that it's not VALID as an income mechanism is patently false. Sure, you've stewarded it and it likely has your sweat equity in it, but it's still an asset that can be converted to currency. You ARE rich with home equity, it just doesn't feel like you expect it to. Just because you don't like electric rates doesn't entitle you to not pay them. The city still has to maintain the roads and infrastructure around you, so it's not like their costs have gone down - in fact, they've likely gone up as you move from a "sure I'll pitch in and mow the town green" model to "we need a full time staff to maintain facilities, we need to purchase their equipment and make meaningful upgrades to handle the volume of people we now have".
You are not reprehensible, it's just there's really bad education on how municipal budgets and taxes work, coupled with loudmouths that just hate taxes using every avenue to preach how they and government are evil, which if you feel attached to your house will ring true.
If you haven't already, I'd recommend exploring the local resources on how money is used and decisions are made. Boise actually has a really nice cost transparency thing (https://cityofboise.openbook.questica.com/) so you can see allocations and make noise if they feel off. Honestly the first area of waste in most areas is excessive police overtime and equipment purchases (at least here we often have to fight their requests for new SUV's/guns every year because they can't be bothered to maintain them despite our lack of crime). Additionally, most board meetings and commissions should be open to attend (http://boisecityid.iqm2.com/Citizens/Board) and even serve on. In my small town we have positions stay open for years as our government is nearly 100% volunteer. I can tell you despite how tight-fisted we are, every year we get retirees telling us to screw the kids and reduce the tax rates (we're in one of the best school districts in the state).
These are all really excellent questions and concerns to have - which is again why I like bigger use of property taxes, as people CAN setup places with crappy schools for retirement and make it clear that it's not a priority (most tax is schools here).

In regards to pension costs - if they just used the corporate models, everything would be fine. Not requiring holding appropriate money is dumb as there's no downside for city officials in setting generous pensions, as they'll likely be out by the time it bites them in the ass.

[Conundrum]

This is a super common sentiment, and thoughts hinge largely on a single thing: do you consider your taxes an investment or capital payment or just variable cost paying? Typical municipal budgets use taxes to pay for continuing consumptive costs and payments on capital (either debt/bond issue or accumulation for purchase depending on area). Do you expect lower electric rates because you've paid them for years? Lower cable bills? Perhaps, but more likely not. I will agree that long term residents are preferable, but in the modern era movement is often required for job/pay improvements and other factors. Not to mention that given it's more accepted, people do it more often.
Your thought is the town or city "owes" you something, but from their point of view, you've paid your share of continuing expenses (perhaps a bit more as you don't have kids).
Now, I'd say neither point of view is exactly on in terms of fairness or equity. Ideally we'd be able to meter taxes by public service contribution etc., but that's way too prone to fraud so it would never happen.
The reality is you've paid the consumptive costs and expect a break on them in the future as you've paid them in one place for a long time. I'd recommend you reach out to your city council or elsewhere to put in place legislation that allows for breaks if taxes exceed income and assets for people who have paid in 20+ years. It would likely pass.
That said - you have an appreciated asset that is, in fact, worth a ton. You have options to reverse mortgage that asset to pay future consumptive costs, sell it and use the assets to pay for rent/stuff (could even do a leaseback until death) or any other number of options. The idea that it's not VALID as an income mechanism is patently false. Sure, you've stewarded it and it likely has your sweat equity in it, but it's still an asset that can be converted to currency. You ARE rich with home equity, it just doesn't feel like you expect it to. Just because you don't like electric rates doesn't entitle you to not pay them. The city still has to maintain the roads and infrastructure around you, so it's not like their costs have gone down - in fact, they've likely gone up as you move from a "sure I'll pitch in and mow the town green" model to "we need a full time staff to maintain facilities, we need to purchase their equipment and make meaningful upgrades to handle the volume of people we now have".
You are not reprehensible, it's just there's really bad education on how municipal budgets and taxes work, coupled with loudmouths that just hate taxes using every avenue to preach how they and government are evil, which if you feel attached to your house will ring true.
If you haven't already, I'd recommend exploring the local resources on how money is used and decisions are made. Boise actually has a really nice cost transparency thing (https://cityofboise.openbook.questica.com/) so you can see allocations and make noise if they feel off. Honestly the first area of waste in most areas is excessive police overtime and equipment purchases (at least here we often have to fight their requests for new SUV's/guns every year because they can't be bothered to maintain them despite our lack of crime). Additionally, most board meetings and commissions should be open to attend (http://boisecityid.iqm2.com/Citizens/Board) and even serve on. In my small town we have positions stay open for years as our government is nearly 100% volunteer. I can tell you despite how tight-fisted we are, every year we get retirees telling us to screw the kids and reduce the tax rates (we're in one of the best school districts in the state).
These are all really excellent questions and concerns to have - which is again why I like bigger use of property taxes, as people CAN setup places with crappy schools for retirement and make it clear that it's not a priority (most tax is schools here).

In regards to pension costs - if they just used the corporate models, everything would be fine. Not requiring holding appropriate money is dumb as there's no downside for city officials in setting generous pensions, as they'll likely be out by the time it bites them in the ass.

Jesus fucking christ man. I have never said my town owes me anything. And yes, I've contacted my council and many have. Not going anywhere. Maybe it will someday.

I'm willing to pay my share and have said it repeatedly. I don't really trust a reverse mortgage or leaseback because a private party is controlling it to make a profit and I haven't looked into it enough. I want to live in my home until I die, I'm willing to give 100% of the equity to the government which is a far better deal for them in the long run for the agreement that I don't get booted for not paying my property taxes as a guarantee for the deal. How's that for paying my fair share? Exchanging seven figures so I can retire where I want to in something I've paid for both to own and in taxes. I do think something needs to be done with the rapid valuations. By the way, we won't vote on implementing impact fees. Some are getting really rich off the community supporting developments which are not developments aimed and offering lower cost housing.

Yes, I review how money is spent in my community. I volunteer on boards to make my community better. 1/3 of my property taxes are schools bonds which I voted yes for. Take those out and my property taxes are only up 850% since I bought my house. I'm not trying to short my community. And this isn't about just me. I've seen this happen to others. This is all hypothetical anyway. A lot can change in 20+ years.

You make a lot of assumptions. I thinks it's time for us to tell each other to f off.

This thread is about real estate and the crash or run up depending on the time frame. I'll be done talking about tax implications and their part of RE now.

[skaredshtles]

THANK YOU! I've had the same argument with my wife before about future housing. She said we should get a house someday with an additional bedroom for guests. I said with the money we'll save by staying put with our 3 bedroom home, we can pay for a shit ton of hotel/vacation rental stays. SCIENCE!!!

We moved from a 3-br, 1300sq ft house when the wife got pregnant with the 3rd kid. Probably would have stayed if the house had a proper basement. Found out that we were simply trading small house problems for big house problems. Looking forward to going back some day to small house problems.

[skaredshtles]

My in-laws sold their paid-off house in the SLC 'burbs (which is now worth more than double what they sold it for in 2006) and built a ridiculous new 6,000 sf home an hour away using the exact logic SJ describes. Predictably, 1) none of the kids wanted to make the drive nearly as often as they thought; and 2) the house cost way more to build than they estimated. They spent a decade being house-poor and both working full-time jobs that required commuting to the city every day. They finally sold the house and now overpay to rent a place they don't like. It was brutal to watch.

You should have counseled them.

[The AD]

We did a decade in 1100 sq ft one bath, and the only way I'm going back to that is divorce.

The lack of a second bathroom would be way worse than the 1100 sq ft. I feel like separate bathrooms is one of the keys to a successful marriage.

[Dantheman]

We moved from a 3-br, 1300sq ft house when the wife got pregnant with the 3rd kid. Probably would have stayed if the house had a proper basement. Found out that we were simply trading small house problems for big house problems. Looking forward to going back some day to small house problems.

With no kids I could do 1,000 sf no problem, especially if there's a garage involved. But, I will agree with Ted that only one bathroom is untenable. 1.5 would be fine, really just need a second toilet.

You should have counseled them.

At the time I was too new to the family to really speak up even though I could see it coming. Not that they would have listened regardless.

[skaredshtles]

My monstrosity was tongue in cheek as well, but I see 2K as kinda the sweet spot (and we're dinks). We did a decade in 1100 sq ft one bath, and the only way I'm going back to that is divorce.

I think one of the issues is that there don't seem to be a ton of well-thought-out smaller houses being built. And I know the rub is that everyone's idea of "well-thought-out" is different.

[schuss]

Jesus fucking christ man. I have never said my town owes me anything. And yes, I've contacted my council and many have. Not going anywhere. Maybe it will someday.

I'm willing to pay my share and have said it repeatedly. I don't really trust a reverse mortgage or leaseback because a private party is controlling it to make a profit and I haven't looked into it enough. I want to live in my home until I die, I'm willing to give 100% of the equity to the government which is a far better deal for them in the long run for the agreement that I don't get booted for not paying my property taxes as a guarantee for the deal. How's that for paying my fair share? Exchanging seven figures so I can retire where I want to in something I've paid for both to own and in taxes. I do think something needs to be done with the rapid valuations. By the way, we won't vote on implementing impact fees. Some are getting really rich off the community supporting developments which are not developments aimed and offering lower cost housing.

Yes, I review how money is spent in my community. I volunteer on boards to make my community better. 1/3 of my property taxes are schools bonds which I voted yes for. Take those out and my property taxes are only up 850% since I bought my house. I'm not trying to short my community. And this isn't about just me. I've seen this happen to others. This is all hypothetical anyway. A lot can change in 20+ years.

You make a lot of assumptions. I thinks it's time for us to tell each other to f off.

Apologies if you took it that way - it was not my intent. It's just the implication of "I've paid for X/why am I hit with Y". In terms of reverse mortgage - if you don't give a shit what happens when you take the big dirtnap, why care if they profit? Realistically it's a vehicle for acquiring properties outside of the open market.
In terms of developers getting rich on the community - absolutely have seen that happen, which is why it's important for planning and zoning to have their heads screwed on straight, as while developers are allowed to profit, it should not be at the expense of everyone else. Great to hear you're committing to the community so much, I'll say thanks as I'm betting no one else does.
For rapid valuations - really the city should be reviewing economic impact of that and smoothing the ramp or revisiting cost/thousand on triggers other than every X years. Most likely they're not because they're enjoying the influx of cash and are lazy.

[Ted Striker]

LOL....seems Edgemore is about the only place to escape that unless maybe you live along the cliff edge. I've never really heard the train in that area...but I'll admit I didn't purposely hang around waiting for a train to pass and note it.

The number of coal trains increased dramatically about a decade ago, necessitating scheduling them during what was previously a "quiet time". The coal trains are also a lot heavier than the regular freight.

re: neighborhoods it's a mixed bag. Parts of Edgemore and Chuckanut are high enough that it's quieter, and there are almost no crossings, but north of Post Point all the way to the airport it's annoying to live anywhere near the tracks. The make or break point seems to be about a mile inland.

[skaredshtles]

<snip> I want to live in my home until I die, I'm willing to give 100% of the equity to the government which is a far better deal for them in the long run for the agreement that I don't get booted for not paying my property taxes as a guarantee for the deal. How's that for paying my fair share? Exchanging seven figures so I can retire where I want to in something I've paid for both to own and in taxes. I do think something needs to be done with the rapid valuations. By the way, we won't vote on implementing impact fees. Some are getting really rich off the community supporting developments which are not developments aimed and offering lower cost housing.

You know - perhaps there's a business opportunity here? Maybe it already exists... some entity would agree to pay your property taxes in perpetuity until you succumb to death's sweet embrace, then takes possession of the house?

Hmmm...

[Conundrum]

Apologies if you took it that way - it was not my intent. It's just the implication of "I've paid for X/why am I hit with Y". In terms of reverse mortgage - if you don't give a shit what happens when you take the big dirtnap, why care if they profit? Realistically it's a vehicle for acquiring properties outside of the open market.
In terms of developers getting rich on the community - absolutely have seen that happen, which is why it's important for planning and zoning to have their heads screwed on straight, as while developers are allowed to profit, it should not be at the expense of everyone else. Great to hear you're committing to the community so much, I'll say thanks as I'm betting no one else does.
For rapid valuations - really the city should be reviewing economic impact of that and smoothing the ramp or revisiting cost/thousand on triggers other than every X years. Most likely they're not because they're enjoying the influx of cash and are lazy.

Ultimately, my problem with reverse mortgage or leaseback is owning my own home outright, has been a lifelong goal instilled to me by my family for generations. It's the one thing tangible that you can own that can protect you until you die (but maybe not with the way real estate is heading). Rich get the assets, normal folks don't which means they don't get security either. As a kid who didn't grow up with much, I've done well for myself and pay a lot in taxes and that's okay. The fact that I may not be able to own something until I die because the gov can't appropriately budget or control transfer of wealth to people who don't need anymore, chaps my ass.

And back to a problem with affordable housing and maybe a bit more on topic, the thought of letting a bank or group of investors mortgage my place back to when I've watched many natives and locals get priced out of where they grew up, doesn't sit well with me. I'd rather the city actually do what they talk about all the time which is affordable housing and infill with my property when I'm dead than JPM make millions on it. I'd write it into my will if I had some type of commitment from the city that they're not going to be charging me $4-5kper month in taxes to live in my house I've had paid off for 20 years forcing me to move once I'm past my earning years.

[m2711c]

works great fer the frenchies....

https://www.nytimes.com/1995/12/29/w...ment-heir.html

"Andre-Francois Raffray thought he had a great deal 30 years ago: He would pay a 90-year-old woman 2,500 francs (about $500) a month until she died, then move into her grand apartment in a town Vincent van Gogh once roamed.
But this Christmas, Mr. Raffray died at age 77, having laid out the equivalent of more than $184,000 for an apartment he never got to live in.
On the same day, Jeanne Calment, now listed in the Guinness Book of Records as the world's oldest person at 120, dined on foie gras, duck thighs, cheese and chocolate cake at her nursing home near the sought-after apartment in Arles, northwest of Marseilles in the south of France."

[Conundrum]

You know - perhaps there's a business opportunity here? Maybe it already exists... some entity would agree to pay your property taxes in perpetuity until you succumb to death's sweet embrace, then takes possession of the house?

Hmmm...

Yeah, reverse mortgage companies (investment firms) which are in my opinion a major issue with affordable housing in the US. Talk about caring about your community.

[klauss]

I think one of the issues is that there don't seem to be a ton of well-thought-out smaller houses being built. And I know the rub is that everyone's idea of "well-thought-out" is different.

And while we're at it, while the sprinter, tesla, and snowmachines are parked in the garage, have these builders never heard of a proper heated gear storage room with abundant space for a quiver of resort/backcountry skis, various accoutrement, and the standard road, gravel, xc, downcountry, enduro, DH, and dirt jumper bikes for everyone in the family.

[El Chupacabra]

Nevada depreciates houses for tax assessment purposes, which I find amusing - and also helpful on a personal level. NV also has a cap on annual increases for primary residences. That, plus the run-up in housing prices since we bought, means our annual property tax bill is something like 0.35% of the likely sales prices of our house.

None of this helps provide for tax-funded services, but, 'murica.

[old_newguy]

Ultimately, my problem with reverse mortgage or leaseback is owning my own home outright, has been a lifelong goal instilled to me by my family for generations. It's the one thing tangible that you can own that can protect you until you die (but maybe not with the way real estate is heading). Rich get the assets, normal folks don't which means they don't get security either. As a kid who didn't grow up with much, I've done well for myself and pay a lot in taxes and that's okay. The fact that I may not be able to own something until I die because the gov can't appropriately budget or control transfer of wealth to people who don't need anymore, chaps my ass.

And back to a problem with affordable housing and maybe a bit more on topic, the thought of letting a bank or group of investors mortgage my place back to when I've watched many natives and locals get priced out of where they grew up, doesn't sit well with me. I'd rather the city actually do what they talk about all the time which is affordable housing and infill with my property when I'm dead than JPM make millions on it. I'd write it into my will if I had some type of commitment from the city that they're not going to be charging me $4-5kper month in taxes to live in my house I've had paid off for 20 years forcing me to move.

Isn’t part of the problem that as the city in general gets more expensive they must in turn pay more for all manner of expenses, ie inflation? It’s not like the city’s costs are frozen at some assessed value from 20 years ago. You know this but higher property values mean higher costs to hire staff, private contractors, etc. Everyone’s costs are going up.

Seems like capping property assessments increases at or near inflation would at least help.

This is all part of a bigger issue which is a) wealth inequality and b) a horrible social safety net. We have allowed the issue to be framed as shelter as an investment instead of what it is which is a basic need of everyone.

I don’t know, just move to Arizona?

[sirbumpsalot]

Yep, I have heard and seen this from multiple retired grandparents. They end up buying a 4 brdrm house, so that when their children come with the grandkids they have room for everyone. I lived across the street from a couple that spends their summers here in Bend, and the grandkids come out for at least a month during the summer. They have all the outdoor toys (bikes, kayaks, floaties for the Deschutes River) that they store in the 3 car garage next to the fully loaded Tahoe, which is next to the Audi Q7.

When you get old and don't travel much anymore....what else you gonna do with your hard earned money?

[Danno]

Doesn't anybody buy *down* any more when they get older? I see people all around me, my age, buying BIGGER houses... despite kids moving out.

I can't wait to GTFO of my 2K sq foot monstrosity and maybe think about something in the 850-1K sq ft range.

This may belong in a different thread, but sure, I could do it, but not my wife. For ex, all of my clothes fit in my closet, dresser, and a small area of our gear closet. My wife has the "office" as her dressing room with a closet, dresser, way more of our gear closet, and has bins and bins of clothes in the shed, that she has to trade out by season. We have 1400 sqft and she probably needs twice that.

[skaredshtles]

Yeah, reverse mortgage companies (investment firms) which are in my opinion a major issue with affordable housing in the US. Talk about caring about your community.

But aren't those set up with a specific date? Like 15y, 30y, etc.? I don't know anything about reverse mortgages...

[Conundrum]

Isn’t part of the problem that as the city in general gets more expensive they must in turn pay more for all manner of expenses, ie inflation? It’s not like the city’s costs are frozen at some assessed value from 20 years ago. You know this but higher property values mean higher costs to hire staff, private contractors, etc. Everyone’s costs are going up.

Seems like capping property assessments increases at or near inflation would at least help.

This is all part of a bigger issue which is a) wealth inequality and b) a horrible social safety net. We have allowed the issue to be framed as shelter as an investment instead of what it is which is a basic need of everyone.

I don’t know, just move to Arizona?

Agree 100% except for the Arizona part.

[XXX-er]

It really depends if you are vacuuming it yourself or paying someone...


Sent from my iPhone using TGR Forums

You need a rhoomba to really smear the dog shit around

[skaredshtles]

This may belong in a different thread, but sure, I could do it, but not my wife. For ex, all of my clothes fit in my closet, dresser, and a small area of our gear closet. My wife has the "office" as her dressing room with a closet, dresser, way more of our gear closet, and has bins and bins of clothes in the shed, that she has to trade out by season. We have 1400 sqft and she probably needs twice that.

[liv2ski]

Jesus fucking christ man.

You make a lot of assumptions. I thinks it's time for us to tell each other to f off.

This thread is about real estate and the crash or run up depending on the time frame. I'll be done talking about tax implications and their part of RE now.

Yup...

[liv2ski]

But aren't those set up with a specific date? Like 15y, 30y, etc.? I don't know anything about reverse mortgages...

As a loan guy, I find Reverse Mortgages predatory in nature and the guys suggesting them can go fuck themselves.

Someone asked, "why don't the olds just sell and move down"? From many of my conversations with neighbors that have lived here 30+ years we all feel the same way, that is, why sell and pay a huge CG hit? In the old days when we bought, the rules were all the equity from the sale was non taxable if rolled into a new primary residence. Then Daddy Shrub signed off on a tax law change the brought you the present $500k exemption for husband and wife. Well fuck that. I will stay here forever, as will my neighbors, before we sell and have to move down a bunch due to CG taxes.
You cunts can go fuck yourselves if you don't like it.

[Ted Striker]

The lack of a second bathroom would be way worse than the 1100 sq ft. I feel like separate bathrooms is one of the keys to a successful marriage.

With no kids I could do 1,000 sf no problem, especially if there's a garage involved. But, I will agree with Ted that only one bathroom is untenable. 1.5 would be fine, really just need a second toilet.

I think one of the issues is that there don't seem to be a ton of well-thought-out smaller houses being built. And I know the rub is that everyone's idea of "well-thought-out" is different.

1924 craftsman bungalow, so the floor plan is only logical if you like tiny beds. And the small one car garage is only usable as storage. The house itself is pretty cool otherwise. We were only going to live there for five years, but plans have a way of changing. At one point we seriously considered an addition, but the gentrification of that neighborhood has frankly been annoying.