patrick.net

WookieMan says

The only way a farmer isn't making a shit load of money is if they've leveraged the land to buy a lifestyle. My kids are friends with two prominent farmers here in IL. They aren't remotely poor or struggling. Property taxes could triple and they'll still be rich. Farmers cry poor a lot. Most are millionaires.

Dude, I knew farmers. They work from sunup to down, 7 days a week, no vacation. It's a very demanding job. I have some LIMITED experience with it, I couldn't do it, most people can't. Tending a large garden, that's hard enough, handling dozens of animals? Forget about it.

It's a completely alien mindset to most people. Just having a couple cows is trouble. Patrick had chickens - just having 1/2 a dozen isn't easy. You are suddenly on a schedule, you can't leave them alone, you have to constantly worry about predators, you have to feed them. Like it or not, they become family of a sort - you become responsible for them. It's not trivial or easy to farm.

Wookie knows about farming also? Who could have known?

Two articles today about housing on prices going down

https://www.msn.com/en-us/money/realestate/home-prices-may-be-on-the-verge-of-cooling-off/ar-AA1g6WaN

https://www.cnbc.com/2023/09/01/home-prices-rise-in-july-but-may-be-on-the-verge-of-cooling-off.html

So housing affordability is becoming a lot more a news topic, as CNBC reports: "It now takes roughly 38% of the median household income to make the monthly payment on the median-priced home purchase, according to Black Knight. That makes homeownership the least affordable it’s been since 1984."

FortwayeAsFuckJoeBiden says

if land tax is up, farmers go out of business

@FortwayeAsFuckJoeBiden

No, that won't happen. In Georgism, the tax is set at only the value of the rent on unimproved land.

If the farmer can rent out unimproved land for, say, $1000 per month, then his tax would be $1000 per month and he can obviously afford it.

The farmer would pay ZERO tax on the increased income from improved land. So once he improves the land (with ditches or whatever) and can bring in $2000 per month, he would STILL pay only $1000 per month.

The idea is to encourage improvements, and discourage mere non-productive land ownership.

Even better, the farmer would pay ZERO tax on his income above that $1000, and ZERO sales tax on everything he buys.

There would be only one tax, the tax on unimproved land values. Everyone would be better off except for the people who are trying to suck money out of productive people via land rents.

“In July, the sales pace of new homes climbed 4.4% compared to June, reaching a seasonally adjusted annual rate of 714,000. On a year-over-year basis, new home sales were up 31.5%.“ - Impressive.

https://www.housingwire.com/articles/new-home-sales-picked-up-significantly-in-july-can-it-last/

So Georgism is like Prop13 on steroids?

Eman says

“In July, the sales pace of new homes climbed 4.4% compared to June, reaching a seasonally adjusted annual rate of 714,000. On a year-over-year basis, new home sales were up 31.5%.“ - Impressive.

Median house price peaked at $480,000 and has dropped to $416,000 by end of April 2023, so it has dropped about 14%.

It likely has dropped present day below $416,000.

This article says end of July 2023 the price was $407,000 : https://www.msn.com/en-us/money/realestate/home-prices-spike-to-over-400-000-after-5-months-of-declines/ar-AA1g2ngf

.
.

RWSGFY says

So Georgism is like Prop13 on steroids?

@RWSGFY

Georgism is the opposite of Prop 13 on steroids.

Prop 13 is pretty close to the worst law ever made, shoveling money up to the very rich at the expense of people who actually work.

It was justified with "Don't kick out grandma!" but never included any means test, and did include landlords and businesses. The result was that the very rich and landlords and businesses profited, and people who actually do work were hurt. Regular house owners were bribed to go along, and betrayed all morality when they did so.

The right answer is to:

1. never tax the building, tax only the land, but ALWAYS tax the land value
2. let the elderly defer the land value tax until they die

You can defer
property taxes once you are over certain age in CA too, so let's keep this noise out.

Georgism is exactly
like Prop13 because it's the same "buy your land in 1970 and pay 1970 property tax in 2023". Except with Prop13 your property tax still grows albeit at a preset rate while under G-ism it doesn't, hence G-ism is Prop13 on steroids. People who
like Georgism but dislilke Prop13 must suffer from
cognitive dissonance.

Under Georgism, your land value tax adjusts with the value of the land.

This is very different than Prop 13, which is an attempt to never have any significant property tax increase.

Patrick says

Under Georgism, your land value tax adjusts with the value of the land.

This is very different than Prop 13, which is an attempt to never have any significant property tax increase.

Didn't you do a big write up on this? Maybe repost it here? I think it has legs as an idea. I love America and would hate to see it become a 3rd world country. I read that 25% of all homes are owned by corporations? True?

ad says

Eman says

“In July, the sales pace of new homes climbed 4.4% compared to June, reaching a seasonally adjusted annual rate of 714,000. On a year-over-year basis, new home sales were up 31.5%.“ - Impressive.

Median house price peaked at $480,000 and has dropped to $416,000 by end of April 2023, so it has dropped about 14%.

It likely has dropped present day below $416,000.

This article says end of July 2023 the price was $407,000 : https://www.msn.com/en-us/money/realestate/home-prices-spike-to-over-400-000-after-5-months-of-declines/ar-AA1g2ngf

.
.

The fact the sales rebounded after 5 months of slump suggests the market is likely close to an equilibrium.

Eman says

The fact the sales rebounded after 5 months of slump suggests the market is likely close to an equilibrium.

The 30-year mortgage rate is still over 7%. I see equilibrium at the current median price for the USA when the rate drops from 7% and steadies between 5 and 5.5%.

..

ad says

I see equilibrium at the current median price for the USA when the rate drops from 7% and steadies between 5 and 5.5%.

Or when/if prices drop to...?

GNL says

Or when/if prices drop to...?

If prices stay constant that is the median home price for USA remains around $410,000.

I think the Fed wants to see housing price grow at a much lower rate than income.

.

ad says

I think the Fed wants to see housing price grow at a much lower rate than income.

The Fed doesn’t get to decide. If they hike rates where housing is so expensive to finance who are they hurting? Such a one dimensional thinking.

Eman says

The Fed doesn’t get to decide. If they hike rates where housing is so expensive to finance who are they hurting? Such a one dimensional thinking.

Check CPI's and PCE's aggregate data for housing inflation. That is one reason why the Fed has increased the Fed Funds' rate to 5.5% and to a 22 year high.

Jerome Powell has made specific comments about housing prices: https://thehill.com/business/4121466-powell-housing-market-has-a-ways-to-go-before-prices-cool/

They are adversely effecting speculators and/or investors like you by trying to reduce asset (ie., residential real estate) prices, regardless of how multidimensional their thinking is.

I think they want to see a return to the mean whereas residential real estate returns closer to the 4% annual appreciation trend line.

.

@ad,

It doesn’t impact me. I’m always a buyer/seller for the right price. They’re hurting the consumers more than anything.

The huge rent/buy ratio disparity in our market makes it hard for people to buy so they rent. This is why we’ve been getting record rents in our market. It’s just much cheaper to rent than to buy. How will the Fed bring it to disparity or 4% annual appreciation target?

In theory, it’s easy. Reality is so different. I’ve had this discussion with my Federal Reserve buddy frequently. Even he doesn’t have an answer for it. Hope is the magic word for them

Perhaps a mild recession. Whatever that means. The Fed is not as bright as they appear to be. HOPE is all they got.

Eman says

ad,

It doesn’t impact me. I’m always a buyer/seller for the right price. They’re hurting the consumers more than anything.

The huge rent/buy ratio disparity in our market makes it hard for people to buy so they rent. This is why we’ve been getting record rents in our market. It’s just much cheaper to rent than to buy. How will the Fed bring it to disparity or 4% annual appreciation target?

In theory, it’s easy. Reality is so different. I’ve had this discussion with my Federal Reserve buddy frequently. Even he doesn’t have an answer for it. Hope is the magic word for them

This makes no sense: if it's cheaper to rent than to buy, how are people who buy houses to rent them
out have a positive cashflow? Their mortgage rents are even higher than these of owner-occupiers, aren't they?

Patrick says

Under Georgism, your land value tax adjusts with the value of the land.

This is very different than Prop 13, which is an attempt to never have any significant property tax increase.

So basically you go from a legally codified and strictly limited tax increases back to basically bending down, grabbing your ankles and letting the newsoms of this world jack up your property taxes as high as they want to and need to finance their frivolous spending? How is it better? Sounds like the system Californians has rebelled against in the first place.

Eman says

The huge rent/buy ratio disparity in our market makes it hard for people to buy so they rent. This is why we’ve been getting record rents in our market. It’s just much cheaper to rent than to buy. How will the Fed bring it to disparity or 4% annual appreciation target?

The median price dropped at least 15% based on the news sources I posted.

The next 12 to 18 months will reveal if there is more of a price drop or not, and if income increases at a faster rate than housing inflation.

What is the capitalization (or cap) rate for those getting "record rents" ?

I understand if you own the home long term as a landlord, the capitalization rate may increase as lease rates increase annually as a greater rate than composite or overall PCE and CPI.

.

RWSGFY says

So basically you go from a legally codified and strictly limited tax increases back to basically bending down, grabbing your ankles and letting the newsoms of this world jack up your property taxes as high as they want to and need to finance their frivolous spending? How is it better? Sounds like the system Californians has rebelled against in the first place.

This is about to happen to me in Maui. Taxes are already (don't even get me started about biz property tax) ~18% on vacation rentals. Maui want's to add another 25%.

This after they scared off the tourists for about a year.

.

I examine total state and local tax burden: https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494

Florida is 46 and California is 17.

9 out of the top 10 are Democrat shitholes.

.

US real estate investors have been losing money on 1 in 7 homes sold — nearly the highest share since 2016. And they most likely took huge hits in these 5 cities
High mortgage rates have eaten into investor profits and dramatically increased the typical homebuyer’s monthly payment. This in turn has slowed homebuying demand and pushed down sale prices, meaning the share of investor-owned homes selling at a loss has gone up.
Phoenix, Arizona, the hardest hit market in March. Just over 30% of homes sold by investors lost money. Phoenix was followed by Las Vegas, Nevada, (28%), Jacksonville, Florida, (20.9%), Sacramento, California, (20.2%) and Charlotte, N.C. (17.4%).

GNL says

I love America and would hate to see it become a 3rd world country. I read that 25% of all homes are owned by corporations? True?

RFK Jr. was hitting this point pretty heavily in his CNBC interview, quoting Jefferson, of course...

How did Canada housing prices become so disconnected with all other countries since the Great Recession?

Eman says

@Eman, What does it mean by "Real House Prices"?

GNL says

Eman, What does it mean by "Real House Prices"?

Adjusted for inflation

.

It’s not only my imagination of the buy/rent disparity ratio. I guess it’s NOT only happening in the Bay Area, but almost across the country.

Eman says

It’s not only my imagination of the buy/rent disparity ratio. I guess it’s NOT only happening in the Bay Area, but almost across the country.

I was looking at rent in Colorado Springs. Seems reasonable as far as $1900 for a 3 bedroom, 2 bath townhome which would normally sell for about $350,000 at the current mortgage rate (around 7%).

.

In July 2023, San Jose home prices were up 10.9% compared to last year, selling for a median price of $1.4M. On average, homes in San Jose sell after 12 days on the market compared to 21 days last year. There were 432 homes sold in July this year, down from 464 last year.

https://www.redfin.com/city/17420/CA/San-Jose/housing-market

The reality of MY market and buy/rent ratio disparity.

Eman says

ad,

It doesn’t impact me. I’m always a buyer/seller for the right price. They’re hurting the consumers more than anything.

The huge rent/buy ratio disparity in our market makes it hard for people to buy so they rent. This is why we’ve been getting record rents in our market. It’s just much cheaper to rent than to buy. How will the Fed bring it to disparity or 4% annual appreciation target?

In theory, it’s easy. Reality is so different. I’ve had this discussion with my Federal Reserve buddy frequently. Even he doesn’t have an answer for it. Hope is the magic word for them

i have a tenant. had multiple applications. i can see why they can’t buy. no Downpayment saved up, they make more than i do. they drive nicer car and have credit cards. not a knock on them, but people really need to control their spending.

Fort Wayne,

That’s society. That’s how some people choose to live. There’s nothing we can do.

Some people value education so they choose to pay more for housing and live in a good school district. Some people live in more secluded neighborhoods due to the potential connections. Some people choose to rent in a good school district for their kids’ sake while some choose to live in a cheaper area and send their kids to private schools.

Some people are flashy and about the outside image. On my birthday, one of my biz partners gave me a pair of Hermès sneakers worth $1.2k. Another person gave me a $300 Louis Vuitton wallet, and I don’t even carry a wallet. I still haven’t worn these shoes…yet, and I don’t know under what occasions to wear them. I still wear my $28 Sketchers shoes from Costco on a daily basis. The LV wallet is in my car’s glove compartment with an extra couple CC’s and some cash all the time.

We went out to lunch with the partner, who bought me the Hermès shoes, and his wife once. When we got to the car, my wife said did you notice his wife? I asked about what? Wife said she wore Valentino shoes, Prada glasses, Louis Vuitton purse, etc… Basically, several thousand dollars worth of wearing stuff. Personally, I feel people who wear these stuff are shallow, but it’s none of my business. Again, that’s society. People do whatever they want with their money. Did I mention his wife drives a $160k brand new car? Again, it’s none of my business. 🤣

Eman says

How did Canada housing prices become so disconnected with all other countries since the Great Recession?

Heard that Canada do not have enough and will not allow to build enough housing. Plus crazy Justin allow quite a number of legal immigrants while illegals sounds like out of control!. Its a disaster for housing market and a real trouble for poor citizens.

This article articulates well about the current dilemma for the housing market. The Fed screwed up again by leaving the Fed fund rate too low for too long. Now, they’re trying to fix it by hiking rates aggressively, and here we are.

The housing market is stuck: Americans can't afford homes, investors aren't buying property, and economists see little relief ahead.

https://markets.businessinsider.com/news/commodities/housing-market-outlook-mortgage-rates-homeowners-investors-real-estate-property-2023-8

Eman says

The Fed screwed up again by leaving the Fed fund rate too low for too long. Now, they’re trying to fix it by hiking rates aggressively, and here we are.

The cycle is skewed whereas the time to reach peak is a matter of about 18 months (July 2020 to February 2022) and the time to reach bottom is at least 4 years (~July 2022 to ???).

Look at how housing prices generally started to bottom from mid 2007 to mid 2012. That was different economic conditions as far as subprime mortgages, the job market, proliferation of work from home, etc.

That is why I think the real estate market will stabilize around 15 to 20% below its peak price (set around February 2022) if the 30 year rate steadies around 5.5% AND unemployment remains below 5.5%. This is emblematic of what Jerome Powell describes of a soft landing.

.

.

I think its much different for stocks and crypto given they have a lot more liquidity. The correction or drop is within a very short period compared to the run up.

.

https://notthebee.com/article/homebuyer-with-a-3000-monthly-home-budget-has-lost-71000-in-buying-power-in-just-one-year

Homebuyers with $3,000 monthly home budget have lost $71,000 in buying power in just one year

Historically high mortgage rates are cutting into buyers' budgets. A homebuyer on a $3,000 monthly budget, for instance, can afford a $429,000 home with a 7.4% mortgage rate, roughly the daily average on August 23. That buyer has lost $71,000 in purchasing power since August 2022, when they could have bought a $500,000 home with an average rate of about 5.5%.