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Housing to pop? (Realtors saying)


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2018 Jan 14, 3:34pm   11,337 views  44 comments

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1   RWSGFY   2018 Jan 14, 4:30pm  

No-no-no! First I get $3M for my shack and then and only then you can have your housing bust 2.0!
2   RWSGFY   2018 Jan 14, 4:35pm  

APOCALYPSEFUCKisShostikovitch says
Satoshi_Nakamoto says
No-no-no! First I get $3M for my shack and then and only then you can have your hosing bust 2.0!


OH!

OK!


Thanks for understanding!
3   Strategist   2018 Jan 14, 4:43pm  

FortWayne says
Due to tax changes, price drops expected, at least what I see.

Any other thoughts?


If realtors could predict, they wouldn't be realtors.
4   HeadSet   2018 Jan 14, 6:39pm  

House and car prices are based on the availability of credit. Easy loans create rising prices while tight credit causes falling prices. Little else matters, including deductability.
5   Booger   2018 Jan 14, 6:41pm  

I don't see this new tax law having widespread impact on housing prices. It only has the potential to affect prices in expensive areas.
6   CBOEtrader   2018 Jan 14, 6:43pm  

Like all of CA?
7   Strategist   2018 Jan 14, 7:44pm  

Booger says
I don't see this new tax law having widespread impact on housing prices. It only has the potential to affect prices in expensive areas.


CBOEtrader says
Like all of CA?


The poor can't buy houses anyway.
The middle class still get the write off.
The rich don't need the write off.
---
Conclusion: the new new tax law will have no impact on home prices.
8   FortWayne   2018 Jan 14, 9:21pm  

CBOEtrader says
Like all of CA?


Do you see this tax change a major issue?
10k as max write off on property taxes does raise taxes on some people.

I'm talking about those who own a house over 1M in price paid, or own multiple houses where property taxes go over 10k total. I do believe it is 10k total, not per property which does raise taxes on a lot of "investors".
9   FortWayne   2018 Jan 14, 9:22pm  

Strategist says
The poor can't buy houses anyway.
The middle class still get the write off.
The rich don't need the write off.


I wonder if people will start selling vacation homes since those are more of a want than a need, and no longer have tax incentives potentially.
10   lostand confused   2018 Jan 15, 12:10am  

FortWayne says
or own multiple houses where property taxes go over 10k total

That should not matter, because my understanding is that becomes a business/not personal deduction.
The 10k is for personal-at least that is my understanding
11   WatermelonUniversity   2018 Jan 15, 12:12am  

unbelievable.

wonder what people read when they google "tax bill."
12   Strategist   2018 Jan 15, 9:47am  

FortWayne says
Strategist says
The poor can't buy houses anyway.
The middle class still get the write off.
The rich don't need the write off.


I wonder if people will start selling vacation homes since those are more of a want than a need, and no longer have tax incentives potentially.


The wealthy, who have vacation property are most likely to have prospered with the rise in stocks and property prices. If anything, they are likely to buy more property.
13   joshuatrio   2018 Jan 15, 10:43am  

Every house down here still selling in just a couple days, if it's priced right.
14   WatermelonUniversity   2018 Jan 15, 11:57am  

no need to mention second home or high income earners. AT LEAST 2/3 of middle class families will be affected by the new SALT deduction.

average home in Los Angeles is $650K. that's $8K in property taxes a year and roughly $13K in mortgage interest.

say a family in which wife and husband each make $100K (average in Los Angeles). even when 401K is maxed, their state income tax is $16K. but they can only deduct $10K total for BOTH property taxes and state income taxes. they used to o be able to deduct $37K but this year they can only deduct $25K. as you can see this means $4K less in their refund.

what about standard deduction you ask? for this family, it is $24K. that's even less than itemizing.

so which home owning families in Los Angeles will not be affected? people whose deductions are less than $24K total. but since mortgage interest and property taxes are already $21K, that leaves only $3K for state income tax.

this means families that pay less than $3K in state income tax per year (total income about $40K a year for both husband and wife) will be "safe" from this tax scam. even janitors make more than this.

this tax scam will make CA home prices go down outside of the bay area. if zillow says your market's this year forecast is 1-2% LOL. you can bet the house it will go down this year.
15   HeadSet   2018 Jan 15, 12:57pm  

I'm talking about those who own a house over 1M in price paid, or own multiple houses where property taxes go over 10k total. I do believe it is 10k total, not per property which does raise taxes on a lot of "investors".

Do not confuse Schedule A personal deductions with the Schedule E expenses used for rental properties. In rental property, interest is a genuine cost of doing business and is still deductible.
16   HeadSet   2018 Jan 15, 1:12pm  

say a family in which wife and husband each make $100K (average in Los Angeles)

A household income of $200k is well above "middle class," even in LA.
From CNN/Money:



A family pulling in $200k should not be poor-mouthing they are "middle class" and decry their taxes going up. Trump is indeed giving the true middle class a tax break This does not include the affluent who only define the "rich" as someone making at least a dollar more than themselves.
17   WatermelonUniversity   2018 Jan 15, 1:19pm  

wow unbelievable. taking single person income and pretending it is household income. no two people making only $100K year can afford to live in a $650K home in Los Angeles.

what is a family making $40K/year, the one that begins getting affected by this tax scam? minimum wage dual income family is already making $50K/year here. what a stupid chart to quote claiming minimum wage and below ($36K/year) is "middle class."

HeadSet says
A household income of $200k is well above "middle class," even in LA.
18   WatermelonUniversity   2018 Jan 15, 1:33pm  

maybe according to some nonsense website middle class family in CA starts at $36K a year. but these people will NEVER be able to afford a house. so it is not relevant to discuss them here.

what being discussed is "will the tax scam affect home prices?" the answer is YES given my calculations above. even if it means "middle class" (according to some useless website's definition) can't afford it here.
19   HeadSet   2018 Jan 15, 1:54pm  

wow unbelievable. taking single person income and pretending it is household income

No, that is household income:

Methodology
For this calculator, we define middle class as two-thirds to two times median income for the county. In counties where two-thirds of median income would fall close to the poverty line, we set the lower end of middle class at $28,500, which is 1.5 times the national poverty level for a three-person household.

no two people making only $100K year can afford to live in a $650K home in Los Angeles.

Average home price may be $650k, but such a average is skewed by so many multi-million dollar homes. A better reference would be median price, which according to below, half the homes in LA currently would sell for $570k or less:

"In order to afford to purchase the median-priced home in Los Angeles, you'd need to earn $96,513 a year, according to HSH.com, a mortgage information website.
The median home price in Los Angeles is $570,500, according to the real estate website, Trulia.com."
https://www.scpr.org/blogs/economy/2015/01/15/17806/la-residents-need-to-make-34-an-hour-to-afford-ave/
20   HeadSet   2018 Jan 15, 2:09pm  

minimum wage dual income family is already making $50K/year here. what a stupid chart to quote claiming minimum wage and below ($36K/year) is "middle class

Not every household is dual earner. Many households are single earner making above minimum wage but not $50k, and many dual income households include one part time earner and total less than $50k.
21   HeadSet   2018 Jan 15, 2:36pm  

what being discussed is "will the tax scam affect home prices?" the answer is YES given my calculations above. even if it means "middle class" (according to some useless website's definition) can't afford it here.

In that specific case about the effect on house prices, you may have a point. Since the CNN/Money definition of middle class (108k top) cannot afford a house according to you, those middle class renters will certainly benefit from the greatly increased standard deduction. But you see a "scam" because very affluent people (above $200k is affluent anywhere) may lose a deduction that is not grandfathered. But shouldn't the rich be paying more of their fair share and doesn't curtailing home price increases make home buying more affordable for the next generation?
22   Malcolm   2018 Jan 15, 3:03pm  

HeadSet says
A household income of $200k is well above "middle class," even in LA.
From CNN/Money:


That's the fundamental problem. Despite the big talkers, that is a large income by any stretch, and very few people make that consistently.
23   Malcolm   2018 Jan 15, 3:08pm  

HeadSet says
But shouldn't the rich be paying more of their fair share and doesn't curtailing home price increases make home buying more affordable for the next generation?


This is the most disgusting part about shoring up prices. Why should new buyers pay artificially high prices because the government wants to protect its tax base as well as FDIC deposits?
24   WatermelonUniversity   2018 Jan 15, 4:47pm  

HeadSet says
Average home price may be $650k, but such a average is skewed by so many multi-million dollar homes. A better reference would be median price, which according to below, half the homes in LA currently would sell for $570k or less:

"In order to afford to purchase the median-priced home in Los Angeles, you'd need to earn $96,513 a year, according to HSH.com, a mortgage information website.
The median home price in Los Angeles is $570,500, according to the real estate website, Trulia.com."
https://www.scpr.org/blogs/economy/2015/01/15/17806/la-residents-need-to-make-34-an-hour-to-afford-ave/


$570K is 2015 data according the link you posted. LMAO.

the number i used $650K is actually the MEDIAN value as of TODAY:
https://www.zillow.com/los-angeles-ca/home-values/
news flash. home prices have been up for the last 2 years.

but even according to your outdated numbers, at $96K a year, they'll still get screwed by this tax bill anyways. because as i said, and your posts kept avoiding to address, while continuing to throw out straw-man arguments, starting at $40K a year, people are already affected by this tax bill.

i don't care what is your definition of the middle class in Los Angeles, what you or some online journalist who has never lived in Los Angeles think the average income for home owners in Los Angeles, who should or should not benefit from the tax bill. nobody is arguing these points. save it for another thread.

again, one more time, starting at $40K a year, people are already affected by this tax bill. that includes dual income family of two janitors making minimum wage. meaning it will drive home prices down. either agree or disagree with this and provide calculations to back up your claims or quit arguing with yourself.
25   WatermelonUniversity   2018 Jan 15, 4:55pm  

HeadSet says
But you see a "scam" because very affluent people (above $200k is affluent anywhere) may lose a deduction that is not grandfathered


YOU DO NOT NEED TO MAKE $200K A YEAR TO BE AFFECTED. THAT IS JUST AN EXAMPLE.

AT $200K YOU LOSE $4K IN REFUND AT $96K YOU LOSE $2K IN REFUND.

STARTING AT $40K A YEAR YOU ARE ALREADY AFFECTED. THE MORE YOU MAKE THE MORE AFFECTED YOU ARE.

CLEAR OR NOT CLEAR?
26   Strategist   2018 Jan 15, 5:31pm  

BorderPatrol says
again, one more time, starting at $40K a year, people are already affected by this tax bill. that includes dual income family of two janitors making minimum wage. meaning it will drive home prices down. either agree or disagree with this and provide calculations to back up your claims or quit arguing with yourself.


Disagree. With a $40K income, you won't qualify for a home in the LA area anyway.
Refer to post #9 on this thread.
27   WatermelonUniversity   2018 Jan 15, 5:56pm  

I KNOW $40K A YEAR CAN'T BUY A DAMN THING HERE.

THIS IS JUST THE MATH SHOWING FAMILIES IN WHAT RANGE WILL BE AFFECTED. WHETHER THEY QUALIFY OR EVEN WANT TO BUY A HOME.

THE POINT IS EVERYONE AND THEIR GRANDMA OWNING A HOME OR TRYING TO BUY A HOUSE WILL BE AFFECTED.

THIS IS THE OPPOSITE OF THE IGNORANT STATEMENT MADE IN POST #9 IMPLYING NOTHING WILL CHANGE: "The middle class still get the write off."

THEY GET MUCH LESS THAN WHAT THEY USED TO. SEE MY CALCULATIONS AGAIN SHOWING WHY STARTING AT $40K A YEAR THEY WILL BE AFFECTED, WHETHER THEY QUALIFY OR EVEN WANT TO BUY A HOME.

CLEAR OR NOT CLEAR?

Strategist says
Disagree. With a $40K income, you won't qualify for a home in the LA area anyway.
Refer to post #9 on this thread.
28   MrMagic   2018 Jan 15, 6:07pm  

FortWayne says
I do believe it is 10k total,


That 10K number is for BOTH property taxes AND state income taxes combined. It's not just for property tax. So in states with higher income, it will be really easy to exceed that 10K in both property and income tax.

HeadSet says
House and car prices are based on the availability of credit. Easy loans create rising prices while tight credit causes falling prices.


This is the correct answer. Very few people buy houses based on what they can deduct on their taxes. The MAJORITY buy a house based on what the monthly payment will be. Since over 2/3rds buy with a mortgage, the payment matters more than the tax deduction.
29   RWSGFY   2018 Jan 15, 6:28pm  

BorderPatrol says
say a family in which wife and husband each make $100K (average in Los Angeles). even when 401K is maxed, their state income tax is $16K. but they can only deduct $10K total for BOTH property taxes and state income taxes. they used to o be able to deduct $37K but this year they can only deduct $25K. as you can see this means $4K less in their refund.


You are overlooking the income tax rate decrease. It will most likely offset the lost deduction.
30   anonymous   2018 Jan 15, 9:39pm  

BorderPatrol says
average home in Los Angeles is $650K. that's $8K in property taxes a year and roughly $13K in mortgage interest.

say a family in which wife and husband each make $100K (average in Los Angeles). even when 401K is maxed, their state income tax is $16K. but they can only deduct $10K total for BOTH property taxes and state income taxes. they used to o be able to deduct $37K but this year they can only deduct $25K. as you can see this means $4K less in their refund.


How can that be Trump's fault? Is he responsible for the sky high real estate prices in CA or the high property tax or the state income tax percent?

Your outrage should be focused on the STATE Dem legislators that have been fucking you over the last decade or so!

Place the blame exactly where it belongs!!

Voting state Dem has consequences!!
31   FortWayne   2018 Jan 15, 9:42pm  

Satoshi_Nakamoto says
BorderPatrol says
say a family in which wife and husband each make $100K (average in Los Angeles). even when 401K is maxed, their state income tax is $16K. but they can only deduct $10K total for BOTH property taxes and state income taxes. they used to o be able to deduct $37K but this year they can only deduct $25K. as you can see this means $4K less in their refund.


You are overlooking the income tax rate decrease. It will most likely offset the lost deduction.


From what I've seen so far, if you are making over 100k and less than some very large amount (don't know where that point is), it doesn't really offset it. you are paying more.

our itemized this year gives us a much better outcome.
next year (that's when shit will hit the fan), everyone will be in tax bill shock around CA.... mostly in how much taxes we are paying here with no longer write off.
32   Malcolm   2018 Jan 15, 9:47pm  

I put on my accounting thinking cap and just realized some things we haven't even touched on.

Someone mentioned second homes and I realized now there are a whole group of people who are going to get pummeled by this tax bill. Ironically, a few that will get hit really hard are Trump voters. Not to say there aren't rich people who see it as patriotic to pay their fair share.

Anyway, here are some scenarios that we weren't thinking of:

A friend bought a house with a gift from his dad. It is a $1 million dollar house in Encinitas. So this house has a mortgage of $500K and a tax bill of $12,000/year. So, now this middle class couple living barely within their means won't have a tax deduction for the mortgage. I just researched the law on CNN money and found that "This is pretty clearly a marriage penalty," said Faulhaber from Georgetown. "If you have two unmarried taxpayers both paying $10,000 in SALT, they will get an aggregate $20,000 when they file, whereas if they get married they suddenly lose $10,000 in deductions." As a married couple the limit is the same as one individual.

It doesn't stop there. This same family, his parents, own multiple million dollar homes as speculative investments. Probably paid with cash. Now they have no deduction of the property taxes of all but one of their homes. As mentioned earlier, people will pretty much all lose the deductibility of their vacation homes. And on top of that, with all that said and done, they now have no deduction for state income taxes in California. That is basically a 10%+ additional tax that is not deductible if they max out the deduction somewhere else. It still gets worse because state income tax is based on the adjusted federal income. If the state income tax paid isn't deducted at the federal level, then tax is due on that state tax that wasn't deductible. So, in essence, not only is someone paying a federal tax on the state income tax withheld, they then get to pay state income tax on the state income tax withheld too. Yikes! A workaround might be to change the classification of second homes to be rentals and then never rent them out. There aren't time limits for income property losses, but then again, people would lose their gains exemptions after doing that for three out of the previous five years. It will definitely be explored, I'm sure.

But wait, there's more: Rich people have another place they love to use as a write-off and a status symbol. Yes, the best of both worlds. Their yachts. Believe it or not, a yacht is deductible as a second home. So now, all of those multi-hundred thousand dollar boats at the marina are not deductible for any property taxes or loan (cough cough) mortgage interest.

And one more group who are going to hate this are people who have large past due tax bills. Basically, if you weren't able to pay your tax bills on time, or had prior tax bills, they are not deductible anymore above the $10,000 limit. Again, for individuals and married couples. I am so glad I am not married.

So, the more I think about this tax bill, I feel like it will most definitely hit the wealthy harder than the lower income brackets. I am concerned by how drastically it will hit some who are not prepared for it.
33   WatermelonUniversity   2018 Jan 15, 10:34pm  

anon_3d78c says
How can that be Trump's fault?


it's a revenge tax policy aiming to hurt the states that didn't vote for him. he's a vile, corrupt pile of excrement.

the bigger scam is the personal tax cuts will expire while tax cuts for his companies are permanent. not to mention he saves hundreds of millions and his sorry supporters save $2K LOL.

this is a scam but as long as his supporters get a bone they turn a blind eye and play dumb.
34   WatermelonUniversity   2018 Jan 15, 10:45pm  

it is not the same.

the money these families get back from the lower tax rates happen independently. they get this money even if they don't buy a house. for a family making $100K that's $2K they get back from lowering tax rates. But housing costs also went up $2K.

what this means is they can OPT not to buy the house and save the $2K and many will do that. it will affect home prices.

this is NOT the same as housing costs stay the same before and after the tax scam. (if this was the case then yes home prices will be unaffected.) but it went up.

Satoshi_Nakamoto says
You are overlooking the income tax rate decrease. It will most likely offset the lost deduction.
35   Waitup   2018 Jan 16, 12:14am  

Combined income: 120k
House paid off in Orange County, CA
property tax: 7,700
2 kids


win or lose with the new tax bill?
36   HappyGilmore   2018 Jan 16, 5:56am  

Malcolm says
So, the more I think about this tax bill, I feel like it will most definitely hit the wealthy harder than the lower income brackets. I am concerned by how drastically it will hit some who are not prepared for it.


That's only because you don't think like the wealthy. It will hit upper middle class hardest, but the wealthy will make out great.
37   RWSGFY   2018 Jan 16, 7:01am  

Waitup says
Combined income: 120k
House paid off in Orange County, CA
property tax: 7,700
2 kids


win or lose with the new tax bill?


http://taxplancalculator.com/
38   anonymous   2018 Jan 16, 7:31am  

BorderPatrol says
anon_3d78c says
How can that be Trump's fault?


it's a revenge tax policy aiming to hurt the states that didn't vote for him. he's a vile, corrupt pile of excrement.

the bigger scam is the personal tax cuts will expire while tax cuts for his companies are permanent. not to mention he saves hundreds of millions and his sorry supporters save $2K LOL.

this is a scam but as long as his supporters get a bone they turn a blind eye and play dumb.


Why did you ignore the fact that these taxes you're complaining about are assessed at the state and local levels, not federal level?

Are the local politicians to blame in CA for the screwing coming to the state?
39   WatermelonUniversity   2018 Jan 16, 11:24pm  

why do you ignore the fact that CA already pays more than its fair share of federal tax? for every $1 in federal tax, CA only gets back $0.64.
https://www.washingtonpost.com/news/fact-checker/wp/2017/10/06/are-red-low-tax-states-subsidizing-blue-high-tax-states-through-the-tax-code/?utm_term=.e1f82455e45f
why do you ignore the fact that losers red states have been leeching off CA for years?

do you even realize the reason for high state income taxes is the higher population which requires more money to maintain roads, school, infrastructures? do you even realize the reason states have no or little income taxes is because nobody wants to go there to begin with because they are basically shitholes? do you realize that the moment they get enough people, they'll start raising taxes too? you think there's something special about the rednecks living in TX, FL and NV? no there isn't. some of the most corrupt and backward shit come from there. tornadoes, hurricanes and desert. that's why income taxes are 0.

why do you ignore other parts of the tax scam i mentioned?

anon_d5928 says
Why did you ignore the fact that these taxes you're complaining about are assessed at the state and local levels, not federal level?

Are the local politicians to blame in CA for the screwing coming to the state?
40   _   2018 Jan 17, 5:23am  

FortWayne says
Any other thoughts?


One of the worst economic theories every, this is a supply thesis and if the tax bill MID rule was keeping supply away then NAR should hope for this to be true to bring in more sales.

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