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Finance and Economics => The Money Board => Economic News, the Global Economy and all Things Monetary => Topic started by: Smurf Hunter on August 04, 2017, 04:21:01 PM

Title: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 04, 2017, 04:21:01 PM
http://www.politico.com/story/2017/08/04/trump-homeowner-tax-benefit-241328

This is nuts.  Even if they only did a small %, the perception would trash the real estate market, and probably defeat the purpose.
As anyone who owned real estate before 2008 recalls, just because the market plunges, doesn't change the amount you owe the bank.

Maybe the average homeowner isn't completely dialed in here, but part of the advantage of owning a home is the deduction on taxes.  If that's reduced or removed completely, combined with a soft or declining housing market, suddenly the economic advantage of home ownership is largely negated.

Could something this craptastically stupid really happen?

This is a loser short term for home owners and a long term loser for tax collectors because market prices will crash.
Title: Re: talk of reducing the mortgage deduction
Post by: Morning Sunshine on August 04, 2017, 04:32:59 PM
I don't know.... you only get that deduction now if you HAVE A MORTGAGE.  I know people who could pay more on their mortgage, but do not because it would mess with their deductions.  Maybe we would get more people trying to pay off their homes?
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 04, 2017, 04:44:34 PM
I don't know.... you only get that deduction now if you HAVE A MORTGAGE.  I know people who could pay more on their mortgage, but do not because it would mess with their deductions.  Maybe we would get more people trying to pay off their homes?

We have a car with less than a year of payments left.  I have the cash to pay it off, but wife and I decided we'd rather have the cash for emergencies than save $150 over the next 9 months.

If nothing else, buyers will get LESS house than previously.  Some quick napkin math for my situation, based on my current interest paid last month, and my income tax rate, it's more than $300 extra monthly.
That all said, if this hurts the real estate market, prices will drop so maybe it could be a wash for the cost of housing?
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 04, 2017, 07:32:24 PM
  The bad home loans from 2008 are what are called assets and they just said something like they plan to release 4 Trillon in assets ...wonder what is going to happen when that floods the way over valued market?
Title: Re: talk of reducing the mortgage deduction
Post by: FreeLancer on August 04, 2017, 08:55:56 PM
It would hurt me to lose that particular .gov handout, but that's probably the point.  Economists broadly agree that the mortgage deduction disproportionately favors the haves over the have-nots.  The current administration promised to right the economic inequalities of the flyover states, so accomplishing that at the expense of left-coast suburbanites with big mortgages probably won't provoke the expected outcry from Republicans in our current political climate.
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 05, 2017, 12:37:22 AM
Maybe we would get more people trying to pay off their homes?

Most definitely. And less people buying houses beyond their means.  And more people inheriting their family homes and renovating existing homes at much lower cost than searching for a different one.
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 05, 2017, 04:37:00 AM
  And more 4 family residences!
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 05, 2017, 07:49:03 AM
It always seemed strange that people would pay 10s of thousands of dollars in extra interest to save a few hundred on taxes. 

http://www.interest.com/home-equity/advice/mortgage-interest-deduction-may-not-be-worth-what-you-think/ (http://www.interest.com/home-equity/advice/mortgage-interest-deduction-may-not-be-worth-what-you-think/)

Another common misconception relates to the difference between a tax deduction and a tax credit.

A tax credit reduces your taxes dollar for dollar. If you get a $2,500 tax credit, your tax bill will be $2,500 lower.

The tax benefits associated with home ownership are deductions, not credits.

They reduce the amount of your taxable income. Their dollar value is equal to the amount of the deduction minus the standard deduction times your marginal tax rate.

So, if you have tax deductions of $15,000, you are married filing jointly and you fall into the 25% marginal tax bracket, you aren’t saving $15,000 on your tax bill.

You also aren’t saving $3,750 on your tax bill ($15,000 x 25%). You’re saving $650 ([$15,000 - $12,400] x 25%).

In fact, the Reason Foundation, a libertarian think tank, found the average amount homeowners saved thanks to the mortgage interest tax deduction was just $615 in 2012.

In the past, when interest rates were substantially higher (such as in the 1980s), the deductions were worth much more, but homeowners should still understand the true level of tax savings that home ownership brings, how these savings are calculated and that these savings are often overstated, even by financial and real estate experts.

The bottom line is that buying property to get tax benefits is the wrong reason to buy property.

The additional expenses associated with owning property will probably offset any tax benefits you receive.

And advice that you shouldn’t pay off your mortgage early because you’ll lose the tax deduction is just wrong. It doesn’t make sense to pay a dollar in interest to save 25 cents on your tax bill
Title: Re: talk of reducing the mortgage deduction
Post by: Redman on August 05, 2017, 08:08:48 AM
When I had a mortgage I was I was never able to use the deduction simply because I didn't have enough other deductions to add up to more than the standard deduction.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 05, 2017, 08:24:59 AM
I am one of the families that even when I had a mortgage, it wasnt enough interest to be over the standard deduction, my neighbor has this situation also, it depends on how expensive your house is, lower income with less expensive houses means not "using" this write off. Where my eldest lives, out of state, if she every finds a house she can buy, in her area for the 'regular people', like her and just about everyone else, no-one is paying over 15,000 a year in interest on their mortgage, maybe 1,000/month total, not 1,000 or over just in interest !

So, I agree that for most of the country, for most average people, it does them no good, the people whom it does good are the coastal intellectual elites ( engineers, managers, etc...) who live where housing prices are expensive and then rich people. So, I agree with IamLiberty, it realy doesnt affect that many people. But, boy, are the ones around here going to fuss about it, because prices overall are high here and they are vocal !
Title: Re: talk of reducing the mortgage deduction
Post by: Morning Sunshine on August 05, 2017, 08:38:19 AM
The bottom line is that buying property to get tax benefits is the wrong reason to buy property.

The additional expenses associated with owning property will probably offset any tax benefits you receive.

And advice that you shouldn’t pay off your mortgage early because you’ll lose the tax deduction is just wrong. It doesn’t make sense to pay a dollar in interest to save 25 cents on your tax bill
[/i]

exactly right.
Title: Re: talk of reducing the mortgage deduction
Post by: archer on August 05, 2017, 09:22:46 AM
this will lead to less ppl buying homes i expect.
Title: Re: talk of reducing the mortgage deduction
Post by: Morning Sunshine on August 05, 2017, 09:30:13 AM
this will lead to less ppl buying homes i expect.

and maybe some people should not be buying homes.  to some people, home ownership is a curse, not a blessing (as Dave Ramsey says).  Or maybe they buy homes they can afford.  Or less than they can "afford" - We were approved for twice as much as we wanted to pay, and that only because we put a cap.  They actually came back and said we could buy more than that.  Our realtor was thrilled, and started to show us bigger houses   ::)  Glad we did not; when 2008 happened (actually it hit us about 2010), we could still afford to make our payments.  If we had bought more just because "you qualify for more", we would have lost the house.

disclaimer - the loss of the deduction will hurt us also.  And I am not in favor of it if .gov doesn't also cut their spending.
Title: Re: talk of reducing the mortgage deduction
Post by: LVWood on August 05, 2017, 10:14:21 AM
Mortgage deduction does me no good.
I have never itemized enough to beat the standard deduction.
So I don't really care.
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 05, 2017, 11:36:22 AM
Below is the table from the Reason article. It is a few years old but about the same as current numbers.  It really benefits the upper middle class.  The vast majority of families see litlle benefit from it.  There is a major geographically component as well. Almost all the benefit accrues to people in the high cost areas like the coasts.  Very, very little benefit accrues to less expensive places to live like the midwest and south.  Basically, the middle class people in the Midwest and south are subsidizing those on the coasts.  It is the same with the state tax deduction.

(http://reason.org/UserFiles/August_2011_Web_Graphic_Figure_4.png)
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 05, 2017, 11:53:33 AM
A couple of things here...

First, I have to admit that I find it amusing that so many people (not here in particular - in the general population) who argue against entitlements and incentives are okay with it when it's a break on your taxes for having a mortgage.

Second, as some of you have said, it's not a break on home ownership, it's a break on maintaining debt for decades.

Also stated was that not everyone who can buy a house should, so if it cuts down on the numbers, that might be a good thing.  If fewer people are buying, the prices start dropping, and now it's suddenly affordable again for more people, and then it swings back and forth like that until it settles at what the market will bear with fewer artificial stimulants.

Part of my job several years ago was to notarize the loan documents for residential home buyers.  By law, I had to be an impartial third party, but I did hold up the various documents (circa 300 pages) and state what each one was for clarity, so they were aware of the document they were signing.  I couldn't say if those documents were good for them, bad for them, or somewhere in the middle.  And maybe I overstepped a bit when I would say "This document shows you have an adjustable rate loan, which means your interest can increase... and very likely will."  They didn't care.  They would tell me that they would just refinance if it went up by much, which was nearly impossible when that occurred, and obviously so.  If interest rates go up, they go up all over, not just with one company.  "Oh, by the way," I would point out - "Here's the document showing you have a $10,000 pre-payment penalty should you choose to refinance within five years."  They still didn't care.  They just wanted that house which, just a few years later, was worth half what they paid... if they were lucky.
Title: Re: talk of reducing the mortgage deduction
Post by: Stwood on August 05, 2017, 04:27:00 PM
When I had mortages, the deductions never amounted to enough to even keep track of the possible deductions.
Title: Re: talk of reducing the mortgage deduction
Post by: Redman on August 05, 2017, 04:52:02 PM
So it seems only the well to do and those living above their means can take advantage of the deduction. The average person living within their means can not benefit from the deduction. Of course the average person living with in their means likely can not afford to buy a newly built home and maybe just barely a 40 or 50 year old home.
Title: Re: talk of reducing the mortgage deduction
Post by: LVWood on August 05, 2017, 05:00:01 PM
Of course the average person living with in their means likely can not afford to buy a newly built home and maybe just barely a 40 or 50 year old home.

Agreed, and I got lucky 5 years ago and picked up a 7 year old $380,000 home for $129,000.
Well within my means.
It was a perfect storm of short sales, and income.
Title: Re: talk of reducing the mortgage deduction
Post by: FreeLancer on August 05, 2017, 05:27:14 PM
This piece (https://youtu.be/QPnxOOeY1Kg), from PBS News, ties into this debate.

The premise is that the upper middle class (20% with earnings > $117k) rigs policy and society to their advantage, which largely keeps those below them from moving up. 
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 05, 2017, 10:27:06 PM
This piece (https://youtu.be/QPnxOOeY1Kg), from PBS News, ties into this debate.

The premise is that the upper middle class (20% with earnings > $117k) rigs policy and society to their advantage, which largely keeps those below them from moving up.

In 2017 $117k is upper middle class?  Maybe I live in the wrong zipcode. 

People in southern CA understand this.  When the average home price is over $500k, the household needs to earn more.  So mom gets a full time job, career is not just ego, but necessary to remain economically viable in that market.

Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 05, 2017, 11:08:24 PM
In 2017 $117k is upper middle class?  Maybe I live in the wrong zipcode. 

People in southern CA understand this.  When the average home price is over $500k, the household needs to earn more.  So mom gets a full time job, career is not just ego, but necessary to remain economically viable in that market.

Or the policies driving home prices to those levels could be stopped. It would probably be better if we changed the system so that people dont have to to pay 50% premiums above construction on homes, $150 for an aspirin in hospitals, $200k for a college degree, etc   The market distortions are enormous.

Agreed, and I got lucky 5 years ago and picked up a 7 year old $380,000 home for $129,000.
Well within my means.
It was a perfect storm of short sales, and income.

I am sure it was more than luck.  At the very least you identified an opportunity and had the courage to go for it.  Well played!

First, I have to admit that I find it amusing that so many people (not here in particular - in the general population) who argue against entitlements and incentives are okay with it when it's a break on your taxes for having a mortgage.

Its a good point.  But it seems fair to argue that the income tax itself is an unjust taking and they are just trying to minimize the theft from them.  Or said a different way, a deduction (where you are keeping your own money) is different than a credit (where you are taking money from others).  Most entitlements are credits and therefore much harder to justify.

Title: Re: talk of reducing the mortgage deduction
Post by: Redman on August 06, 2017, 07:57:29 AM
I am sure it was more than luck.  At the very least you identified an opportunity and had the courage to go for it.  Well played!

We had the opportunity and since we couldn't take the mortgage deduction we took her parents house when they died and got rid of the house payment. Money saved.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 06, 2017, 08:34:22 AM
Or the policies driving home prices to those levels could be stopped. It would probably be better if we changed the system so that people dont have to to pay 50% premiums above construction on homes, $150 for an aspirin in hospitals, $200k for a college degree, etc   The market distortions are enormous.


Home prices out here have nothing to do with construction costs, which of course are expensive, but with property, land, prices due to too many people and no more room, and just basically lack of supply v demand and outright speculation. A house sells for the largest amount it can get away with, and most houses are not new construction, that is very rare. Now it could be that when new houses are built right outside of the bay area, that they are gouging based on what houses go for closer in.

So, because of all that, people with incomes that can be fairly high consider themselves middle class. A family with an income of 200,00 would consider themselves middle class, based on having to struggle with 2 income earners to pay a mortgage on a modest home. Of course, about everyone considers themselves middle class from incomes of about 60 - 300 .

It is hard to look at home prices you read about as they often include condos. So, I doubt an average home price in southern Ca is 500, sounds low, but I dont live there. You cant get a home for that low around here. Maybe a teardown. A small cabin by me did sell for 650 last week, so this does happen, but that is low end, not average. I think a family anywhere in the bay area would budget for at least 800, for a commute to silicon valley, and much more in a decent neighborhood in the valley proper. I hear of rents on a 3 bedroom house of 3500-5000 a month, maybe a 2bdrm apt or condo can be as low as 2500. Which renters complain about, but which make perfect sense given the mortgage payments and property tax payments if such were to be purchased at todays market. SO, new buyers do have mortgage deduction write-offs, and people who bought over 20 years ago, maybe not.
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 06, 2017, 11:48:33 AM
In 2017 $117k is upper middle class?  Maybe I live in the wrong zipcode. 

People in southern CA understand this.  When the average home price is over $500k, the household needs to earn more.  So mom gets a full time job, career is not just ego, but necessary to remain economically viable in that market.


Depends on whether we're talking household income or individual income too.
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 06, 2017, 05:25:30 PM
Home prices out here have nothing to do with construction costs, which of course are expensive

That is my point, it should! 

There is plenty of land out West.  Population density of California is less than states like pennsylvania.  Yet avrrage home price in pennsylvania is $160k vs $390k in California.  There is a major market distortion in California caused by building and other policies. 

Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 06, 2017, 06:17:39 PM
That is my point, it should! 

There is plenty of land out West.  Population density of California is less than states like pennsylvania.  Yet avrrage home price in pennsylvania is $160k vs $390k in California.  There is a major market distortion in California caused by building and other policies.

There is plenty of land in the west, but a large chunk of it is virtually unusable, so the population is highly concentrated.  Nevada has the same problem as inland Southern California, though we have the addition of something like 80% (can't remember the actual number - 84%?) of the land in the state being the property of the federal government.

If there's no water, there are no utilities even reasonably close by, and no industry within 100 miles or more, then you're not going to get anyone except those willing and able to live completely off grid - assuming the government doesn't own the land in the first place.  And most people either can't or won't do that, so they end up piled on top of each other and fighting to outbid each other on the available homes.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 06, 2017, 09:44:56 PM
That is my point, it should! 

There is plenty of land out West.  Population density of California is less than states like pennsylvania.  Yet avrrage home price in pennsylvania is $160k vs $390k in California.  There is a major market distortion in California caused by building and other policies.

Jobs. The empty land is not by the jobs. The northern CA insane housing prices are in the greater San francisco/Silicon Valley area. People there will bid up pricesso they can live anywhere near by where they work. There is alot of industry concentrated there. And, alot concentrated in, let's say, Palo Alto, which has so much more companies than it does housing that there is all this traffic, and a light rail and the cal train bring commuters in from the close places like San Jose.

This perceived problem is being worked on by the new bullet train. They have given up on the southern CA route/connection for the time being and are implementing the first piece of the rail line from Merced to San Jose, and upgrading the CalTrain line that goes from SanJose up the peninsula to the dense job areas and ends in San Francisco. So, in effect, in 7 years they say you will be able to get from Merced to SanJose in an hour. So, there is the new housing area.....
Quote
Bay Area leaders, however, say the train to Silicon Valley would also open up a world of opportunities here.

“We are talking about a trip from Madera taking 40 minutes to downtown San Jose when you cannot get from the Almaden Valley to downtown San Jose in 40 minutes,” said Carl Guardino, CEO of the Silicon Valley Leadership Group. “The unemployment rate in the Central Valley is twice the amount as the rest of California, and this is going to provide such opportunities for workers throughout the Central Valley and then a way for travelers to get from the Central Valley to jobs in Silicon Valley.”

Bullet train proponents say another reason it will be such a game changer for the Bay Area is that it will make it easier to electrify Caltrain from San Jose to San Francisco because the bullet trains and Caltrain will run on the same tracks. Moreover, Guardino said, getting the train here by 2025 means it would arrive at about the same time as the scheduled BART extension to downtown San Jose.

“So we would have electrified Caltrain, BART and high-speed rail all coming together at the Grand Central Station of the West: Diridon Station,” said Guardino, a member of the state’s transportation commission.

“It is obviously a great victory for Silicon Valley

http://www.mercurynews.com/2016/02/17/california-bullet-train-headed-first-to-san-jose-a-big-bay-area-win/

Quote
California’s Central Valley and Silicon Valley are less than three hours apart by car, but the small towns and vast stretches of farmland along the middle of the state are a world away from $3,000-per-month studio apartments and jammed freeways.

America’s first-ever high-speed rail line would shrink the distance between the two estranged valleys. As soon as 2025, it could connect the nation’s breadbasket with its most powerful economic engine, whisking people from the agri-industrial city of Fresno to San Jose in under an hour.

In recent weeks, that vision appeared to be coming together with lightning-like speed — something considered impossible before June 6.

That’s when search giant Google announced plans to build a 20,000-employee campus within easy walking distance of San Jose’s downtown Diridon Station, where both bullet and BART trains would stop, raising some tantalizing possibilities:

Will the 220-mph train become a Silicon Valley Express for droves of millennials and others who can barely afford to rent, let alone buy, a Bay Area home? Will high-tech companies begin moving some of their operations to a part of the state where a family can still buy a nice three-bedroom house for $300,000, triggering a monumental population shift in California?

“Why not build new communities, well-designed communities, sustainable communities in the Central Valley?” asked Jim Wunderman, president and CEO of the Bay Area Council, a business-sponsored public policy group. Why not “have more folks live there and have an efficient and pleasant train commute into the Bay Area?”

http://www.santacruzsentinel.com/article/NE/20170723/NEWS/170729869

Now the problem with all of this, for us preparedness minded folks, is that they are all happy about paving over this countries major agriculture region for housing ! We have already begun sliding down the slope, as the  country now imports more than it exports, if I recall correctly. There are other issues too, like water....

so, here is a map http://www.hsr.ca.gov/docs/newsroom/maps/Business_Plan_Map_2016.pdf  The part from SanJose to sanfrancisco is the already existing CalTrain line. So, you can see how far away these places are
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 07, 2017, 05:03:48 AM
  With housing so costly and in short supply...Why does California welcome so many low income fruit pickers in and provide them with housing?
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 07, 2017, 08:43:55 AM
  With housing so costly and in short supply...Why does California welcome so many low income fruit pickers in and provide them with housing?
agriculture is very big business in some parts of the state, including my county. Produce needs to be picked. You either raise the pay of those working, which is also done, at least one farm by me pays $15/hour, with benefits, or you bring in illegals and provide housing. Or, more usual, the government section 8 program, or migrant farm worker housing, subsidises the housing. But, this is off track for this thread. This is a very large state, in general, the agricultural counties are geographically removed from the industrial counties, so 2 way different housing markets. However, these barriers are being removed by enhanced commuting transportation. So then the non-ag industry tied housing area is going to expand. We will lose farmland ( that exports fruit, nuts and produce to everyone outside the state) and we will have some amazing political water wars
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 07, 2017, 09:09:41 AM
agriculture is very big business in some parts of the state, including my county. Produce needs to be picked. You either raise the pay of those working, which is also done, at least one farm by me pays $15/hour, with benefits, or you bring in illegals and provide housing. Or, more usual, the government section 8 program, or migrant farm worker housing, subsidises the housing. But, this is off track for this thread. This is a very large state, in general, the agricultural counties are geographically removed from the industrial counties, so 2 way different housing markets. However, these barriers are being removed by enhanced commuting transportation. So then the non-ag industry tied housing area is going to expand. We will lose farmland ( that exports fruit, nuts and produce to everyone outside the state) and we will have some amazing political water wars

So in your thinking, assuming a network of bullet trains or similarly efficient transportation, you'd have silicon valley and the surrounding counties would become bedroom communities?
To a smaller degree that happens up here.  When I was a little kid there was a ton more agriculture in just 10 miles outside the metro area.  Now aside from smaller boutique/hobby farms you have to drive an hour or more.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 07, 2017, 09:35:32 AM
So in your thinking, assuming a network of bullet trains or similarly efficient transportation, you'd have silicon valley and the surrounding counties would become bedroom communities?
To a smaller degree that happens up here.  When I was a little kid there was a ton more agriculture in just 10 miles outside the metro area.  Now aside from smaller boutique/hobby farms you have to drive an hour or more.

You already have to go more than 1 hour drive from Silicon Valley to hit major ag. People commute 1-2 hours each direction, ones with low salaries that want a single family home.

So, I am no saying it is desirable, I think it is NOT desireable. But, from teh articels I linked to, and others, it does seem to be what business and government is going towards as a solution.....The bullet train will make a 40 minute train ride out of what is now a 3hour with no traffic drive. So, this would be a much bigger "footprint" than what is out by you with the "light rail"  trains. The bullet train is much faster, so cover a large distance in that 40 minutes, look at the map I linked to
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 07, 2017, 09:44:35 AM
You already have to go more than 1 hour drive from Silicon Valley to hit major ag. People commute 1-2 hours each direction, ones with low salaries that want a single family home.

So, I am no saying it is desirable, I think it is NOT desireable. But, from teh articels I linked to, and others, it does seem to be what business and government is going towards as a solution.....The bullet train will make a 40 minute train ride out of what is now a 3hour with no traffic drive. So, this would be a much bigger "footprint" than what is out by you with the "light rail"  trains. The bullet train is much faster, so cover a large distance in that 40 minutes, look at the map I linked to

Last year we hired this kid fresh out of college and he worked in our downtown SF office.  He was paying $3500/month for a STUDIO apartment to be within walking distance.
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 07, 2017, 09:59:33 AM
Last year we hired this kid fresh out of college and he worked in our downtown SF office.  He was paying $3500/month for a STUDIO apartment to be within walking distance.

College did not do much to educate him. While a good job is great...if you are a slave to wages to support your living space ,it is a life wasted.

My 2100 foot home cost me less than 56K and it was not unique as the average home in my neighborhood is 70K and often less.

If it is all you can do to simply support a home, then you should MOVE.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 07, 2017, 10:32:34 AM
College did not do much to educate him. While a good job is great...if you are a slave to wages to support your living space ,it is a life wasted.

My 2100 foot home cost me less than 56K and it was not unique as the average home in my neighborhood is 70K and often less.

If it is all you can do to simply support a home, then you should MOVE.

This gets back to topic on this post, an area like this is the people who do use the income tax deduction as they are paying ALOT of interest on a mortgage, because housing prices are a very large part of peoples pay. 50% of pay to rent/mortgage is on the low end, I think an awful lot are paying way more, and then are at the produce distribution weekly, etc...

I often say this, it is another potential solution. But, instead, we get demands for more government subsidized affordable housing. I figure if there are no servers, baristas, housecleaners, etc.... then the tech workers will complain the area is unliveable and maybe the companies will spread out their operations -- but this is not going to happen ! It is hard for people to think about taking risks these days, it becomes normal this housing craziness, people often do not leave what they know. I did communicate with someone on this forum a few years ago to talk to him about housing when he was considering a transfer. He did not transfer. Absolutely everyone (ok, not everyone, but you know what I mean...) is paying a large percentage of their pay for housing. I was stuck here for years, until 1 year ago actually, as California courts do not allow divorced parents to move away with their children, even if it is unaffordable. There is no provision for this (in practice, in theory, there is.) This last year, I have been paying 2/3 of my take home, and I own the house outright ! Doesnt leave anything for needed repairs. Likely I will leave once the kids settle in a spot, and irritate others as I will be another Californian moving to "their" area and buying up "their" housing. 2 of my family members are off to other states, and everyone talks about it.
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 07, 2017, 11:02:14 AM
San Francisco is kind of the mecca for "Holy crap, it costs how much???" real estate, and this is an interesting article from a little more than a year ago.

After first decline in years, SF home prices hit all-time high in April 2016 (https://www.openlistings.com/blog/san-francisco-median-home-price-april-2016/) - Open Listings.com

I had some friends from San Francisco that were contemplating a move to Vegas, mostly because taxes are fairly reasonable (no state income tax) and we're business friendly (tech companies love us).  They literally laughed when I told them you could buy an average home in an average safe neighborhood for under $300,000.  That's a down payment for many houses out there.  But at the same time, I know you can buy multiple houses with $300,000 in other areas. 

It all comes down to finding a place where you can work.  And the annual pay for a job in cheaper areas may not be as high as for the more expensive ones, though it's not usually a 1:1 comparison.
Title: Re: talk of reducing the mortgage deduction
Post by: fritz_monroe on August 07, 2017, 02:13:01 PM
Folks, the thread is drifting a lot from the original post. 
Title: Re: talk of reducing the mortgage deduction
Post by: Morning Sunshine on August 07, 2017, 02:18:10 PM
Folks, the thread is drifting a lot from the original post.

kill joy  ;)
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 07, 2017, 02:47:40 PM
To my original point, I'm hearing many of responses of  "doesn't affect me". 
Fair enough, but there are plenty of people it does/could affect.

There are two axis of concern with this proposed change:

1) how it affects federal tax revenue
2) how it affects the real estate market

#1 is being my concern.  The .gov doesn't balance their budgets most of the time as it is.

#2 is closer to home (pun intended).
We know historically, if interest rates go way up, or it's otherwise more difficult to borrow money for a mortgage, prices are kept down.

So as a home owner, depending on your life stage this is a threat on a couple levels:
1) you may get a smaller tax refund (or owe money)
2) your home value may not increase as much as otherwise

Again, if you are retired, plan to die in your current home, I'm happy for you, but I also don't care for the context of this subject.
There are millions of young families who purchased homes with the home of building financial equity.

When/if the rug is pulled out from under, we could see something like 2008 again.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 07, 2017, 03:08:40 PM
yes, for the people in my area who do use this deduction, which is most recent-ish home buyers (since recovery of 2008 crash for sure) and these people are paying a larger, much larger, than national average percentage of take home on housing, so even though high salary "on the edge" a bit in their budgets, yes they are going to feel that pinch of a few hundred a month effect less take home due to the loss of this deduction, and since people buying in the expensive market, when they look at budget of the maximum amount they can possibly pour into a house payment, which is what they do, that calculation does take into account the money they dont spend in taxes due to this write-off. So, yes, without the write-off, they can afford that much less of a house price. Of course, in this area the prices are so speculative that not going up as fast will be a good thing ! And, so, it might slow down the rate of increase in prices, but in itself, would not make anyone lose money due to a dip in the increase of prices, their "investment" will just yield slightly less when they sell. But, those young families right on the edge will absolutely feel a budgetary pinch, and they will be vocal about htis, and likely already are being vocal about it to congressional rep's
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 07, 2017, 03:11:45 PM
the other question of course in any tax deduction is fairness appropriatness. So, is it right that we give a tax write-off to this group of people ? Can we afford this ? Has it outlived its usefulness, and is now just another piece that helps fuel absurd houging bubble/speculation and helps make the market that much less affordable ?
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 07, 2017, 05:02:21 PM
the other question of course in any tax deduction is fairness appropriatness. So, is it right that we give a tax write-off to this group of people ? Can we afford this ? Has it outlived its usefulness, and is now just another piece that helps fuel absurd houging bubble/speculation and helps make the market that much less affordable ?


That's my issue.


Is it fair to subsidize people who have a mortgage, which effectively penalizes those who either rent or own their home outright?

Title: Re: talk of reducing the mortgage deduction
Post by: FreeLancer on August 07, 2017, 05:39:26 PM
Is it fair that marginal tax rates increase as one's earnings increase?  If so, how high should the top bracket be?  Deductions for mortgage interest, and property and state taxes help bring those high rates down a notch, although the AMT usually kicks in and still extracts an extra pound of flesh. 

How much of anyone's income does .gov have a right to?
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 07, 2017, 05:49:38 PM
Is it fair that marginal tax rates increase as one's earnings increase?  If so, how high should the top bracket be?  Deductions for mortgage interest, and property and state taxes help bring those high rates down a notch, although the AMT usually kicks in and still extracts an extra pound of flesh. 

How much of anyone's income does .gov have a right to?

yep, good point. When I made enough to have itemized deductions, and I did for many years, I always thought if deductions go away as part of simplifying brackets, that could even out. Overall, people are paying too much to taxes, and it is never enough.....

Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 07, 2017, 06:04:42 PM


How much of anyone's income does .gov have a right to?

NONE.
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 07, 2017, 07:48:00 PM
Is it fair that marginal tax rates increase as one's earnings increase?  If so, how high should the top bracket be?  Deductions for mortgage interest, and property and state taxes help bring those high rates down a notch, although the AMT usually kicks in and still extracts an extra pound of flesh. 

I don't think it is fair, and I'm not even close to high tax bracket.  I'd be thrilled if we went to a flat tax and got rid of the menagerie of "special people" tax breaks.

How much of anyone's income does .gov have a right to?

However much we, as a group, decide we need to run emergency services like EMTs and things we (almost all) use like roads and law enforcement and judges and regulatory agencies like the EPA that make it so we can breath without sucking in chunks of pollution.
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 07, 2017, 11:24:05 PM
The .gov wants more property tax base, so they have an incentive to encourage home ownership.  So in a weird way, the FED .gov gives us a deduction, so we are more motivated to buy a home, and fund our LOCAL .gov.

Why can't the FED just give money to the LOCAL directly???
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 08, 2017, 04:06:18 AM
The .gov wants more property tax base, so they have an incentive to encourage home ownership.  So in a weird way, the FED .gov gives us a deduction, so we are more motivated to buy a home, and fund our LOCAL .gov.

Why can't the FED just give money to the LOCAL directly???

Because they can't GIVE what they don't first TAKE MORE of......
Title: Re: talk of reducing the mortgage deduction
Post by: LVWood on August 08, 2017, 09:54:12 AM
Because they can't GIVE what they don't first TAKE MORE of......

And that's the truth...
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 12, 2017, 08:39:57 AM
This gets back to topic on this post, an area like this is the people who do use the income tax deduction as they are paying ALOT of interest on a mortgage, because housing prices are a very large part of peoples pay. 50% of pay to rent/mortgage is on the low end, I think an awful lot are paying way more, and then are at the produce distribution weekly, etc...

Yes, and this is geographically concentrated in a few markets where regulations have created a market distortion.  The  interest is directly determined by the underlying cost.  And the underlying cost in these markets is driven by political decisions on land use (Not In My Backyard syndrome) not real scarcity.  This is one of the few things I agreed with former president Obama on...you have to stop the underlying political driver...regulations driving up the costs and stoping new housing from being developed.  Then the whole mortgage deduction becomes moot like it is in the vast majority of the country.

https://www.forbes.com/sites/scottbeyer/2016/09/30/the-verdict-is-in-land-use-regulations-increase-housing-costs/#6f7800d94162 (https://www.forbes.com/sites/scottbeyer/2016/09/30/the-verdict-is-in-land-use-regulations-increase-housing-costs/#6f7800d94162)

This past Monday, September 26, could prove to be a landmark day in the political discussion about urban America's housing woes. On that day, the connection between land-use regulations and higher housing costs, long made by urbanist bloggers and think-tankers, was finally acknowledged by a sitting president, when the Obama administration published the report "Housing Development Toolkit." Rather than echoing past presidential administrations, and thinking up all the ways that the federal government could subsidize homeownership, the report listed why homes are so expensive in the first place: restrictive zoning, bureaucratic delay and other regulations. The report laid out a 10-point plan for how expensive major metro areas can reduce their housing prices, mainly by liberalizing their markets to increase supply.
...
“that in much of America the price of housing is quite close to the marginal, physical costs of new construction. The price of housing is significantly higher than construction costs only in a limited number of areas, such as California and some eastern cities,” with “zoning and other land use controls, play[ing] the dominant role in making housing expensive.”


http://www.mercurynews.com/2017/08/12/housing-crisis-will-california-force-its-cities-to-ok-more-building/ (http://www.mercurynews.com/2017/08/12/housing-crisis-will-california-force-its-cities-to-ok-more-building/)

Housing crisis: Will California force its cities to OK more building?
State lawmakers are desperate to address a statewide problem that has been decades in the making.


Amid a housing crisis that is displacing the poor and forcing millennials and countless others to look outside the Bay Area to live, all eyes turned this week to the tiny Peninsula town of Brisbane where a developer wants to build thousands of homes on a 684-acre swath of wasteland.

Powerful tech companies, state lawmakers and pro-growth activists from around the region implored the City Council on Monday to allow housing on land once used as a rail yard and a landfill ​— an idea many residents oppose. But after hearing passionate arguments from both sides, the City Council shelved the decision, prolonging a land-use debate that has dragged on since 2005.

“There is a paralysis when it comes to decisions about housing, and the Brisbane project is the poster child for that,” said Matt Regan of the Bay Area Council, a business-sponsored public policy group.
In the nine-county Bay Area, the median price for a single-family home has topped $800,000. And nearly one-third of renters statewide — 1.5 million households — spend more than half their income on rent, according to state estimates.

As soon as next week, lawmakers are expected to unveil a package of affordable-housing bills that will include new tools to prod cities and counties to add their share of housing — at least, in theory.

“I think that many of my colleagues understand that individual decisions by city councils and boards of supervisors are having an extremely negative and detrimental impact on our region,” said Assemblyman David Chiu, a former San Francisco supervisor who chairs the Assembly’s housing committee. “When you have so many decisions going the wrong way on proposed housing that meets all local laws and planning and zoning requirements we have to do something different.”


Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 12, 2017, 08:45:09 PM
Yes, there is a parcel of land in Brisbane that could be developed.

But, this is an anomaly, for the most part, it is NOT a political decision, for most of the bay area, there is no more land. I live out here, and drive thru these places, etc..... Look at a map of where SanFrancisco is located, water on 3 sides, on down that peninsula, the bay on one side, and mountains on the other. What small bits that can be found, like that one in Brisbane, would be a drop in the bucket for the demand out here.
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 12, 2017, 09:18:00 PM
I wonder if people in other states, especially on the east coast, understand how truly massive California is.  And as I said, it's not like you can just drop a city in an unused area.  The reason it's still unused is because it's very likely completely unusable.

It's like in the Vegas area - so much land around, but most of it is not suitable because it's either owned by the BLM/military/USFS, a ridiculous amount of miles away from water (river, aquifer - any type) or consists of about two inches of sandy soil above several feet of solid caliche (https://en.wikipedia.org/wiki/Caliche).  I have literally gardened with a jackhammer in both California and Nevada. 

And with no water for miles and miles and miles, there's no industry, and with no industry, there's no way to make a living and pay even a nominal house payment in the outlying areas.  When you do find the smaller town on the outskirts, there's usually a very large portion of the population supported by either welfare, disability or social security payments, not employment earnings.
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 12, 2017, 09:33:37 PM
I wonder if people in other states, especially on the east coast, understand how truly massive California is.  And as I said, it's not like you can just drop a city in an unused area.  The reason it's still unused is because it's very likely completely unusable.

Well, i routinely travel all over the country.  i have had clients in both San Francisco and LA and have probably spent a couple years there if i counted up all the travel days.  From what i have seen it is exactly like the experts cite, an unwillingness to let the market respond to the needs.  What does California have to lose by adopting more reasonable land use policies?  Why cant developers be allowed to "build up" in some areas to provide housing for younger, less affluent people?  Like all the experts aay, it makes no sense.

Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 12, 2017, 09:41:25 PM
https://www.bizjournals.com/sanjose/news/2017/02/16/bay-area-housing-prices-crisis-regulation.html (https://www.bizjournals.com/sanjose/news/2017/02/16/bay-area-housing-prices-crisis-regulation.html)

Should a Bay Area house really cost $300K?
California's housing prices overinflated by regulatory hurdles, building laws, report says



The Bay Area is too expensive to live in because the region's housing crunch is worsened by overly-restrictive building laws and regulatory hurdles, a new report says.

The New York Times asked in an article this week, "Why Does It Cost So Much to Live in California?" It parsed data from a paper by two economists, Ed Glaeser and Joe Gyourko, that found that in coastal metropolitan areas (including San Francisco), that most projects proposed for housing drag on for years because of the state's onerous regulatory framework.

"As the chart shows, the worst discrepancy is the San Francisco metropolitan area, where a standard house should cost about $300,000 — but in reality is more like $800,000 (based on 2013 figures)," the Times reports. "Next comes cities and counties in coastal Southern California — basically a band of overpriced housing that stretches downward from Ventura to the San Diego border."

That research paper, "The Economic Implications of Housing Supply," argues that once a project has gone through years of environmental reviews and restrictive state and local regulatory hurdles, the housing it then puts on the market is vastly overpriced.

"The result is overpayment on a grand scale for the few homes that do get built. Their figures are theoretical, and people are sure to disagree with them," the Times reports.

"The broader point — which isn’t remotely controversial — is that California cities have some of the most restrictive building laws in the nation, and this is a big reason why the state’s per capita home supply is 49th out of 50 states, and why it costs so much to live here."


(https://media.bizj.us/view/img/10344382/unnamed*xx.png)
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 12, 2017, 10:29:16 PM
What they have to lose is the character and liveablity, such as it is, of what they have now ! San francisco is Sanfrancisco and not New York or LA due to its historic neighborhoods, etc... And, they did just build a new high rise apartment building, and it is sinking...

The smaller cities feel the same way, they have height restrictions in established neighborhoods. they do not want to become nothing but high rise apartments with no yards. On the other hand, they do build new multistory apartments and condos in the urban core areas by transit.

People who live in existing single family home neighborhoods have ALOT to lose by letting zoning change ! They would no longer live in a single family home neighborhood, some developer would by a house and put in a 10 story condo building next to them ! Is that what you think San Jose and Palo Alto, etc... should do ? DO you realy think the people who live in those neighborhoods would agree to such zoning changes ? If they had nothing to lose, why wouldnt they ? Because, they do have something to lose in terms of lifestyle in that neighborhood.

I lived in Silicon Valley proper for about 20 years. Including in a very nice, one of the most desireable, single family home neighborhoods. A place where you have large yards, tree lined streets and can walk to the library and shops. There would be an awful lot to lose by changing zoning to allow multistory dense condos to replace the single family homes. The entire neighborhood would become something else entirely, and not be anywhere near as liveable ! I cant imagine residents allowing such a thing, and why would they ? People actually prefer to live in a nice, safe neighborhood where the kids rollerskate on the sidewalks, play in teh back yard, and they know their neighbors.....
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 13, 2017, 07:04:10 AM
What they have to lose is the character and liveablity, such as it is, of what they have now ! San francisco is Sanfrancisco and not New York or LA due to its historic neighborhoods, etc...

Agreed, it s a choice.  They are using the force of government to suppress housing development driving up the price of housing.  This Not In My Backyard approach feeds a haves vs. have-nots dichotomy with the have-nots being pushed to the streets.


(https://media1.fdncms.com/orlando/imager/list-says-florida-is-10th-in-the-nation-fo/u/original/2351536/homeless.png)

And the federal tax code is being used to force people in the other states to subsidize this practice.  So we end up with a tax at the federal level whose purpose isn't to fund the public good but to transfer wealth from lower wage workers in the central part of the country to higher wage workers in these areas. 

(https://files.taxfoundation.org/20170810130243/HomeMortgIntDed-01-1024x895.png)

Hence the impetus across much of the country to reset the tax system to get back to a more fair and honest approach where the consequences of these local political decisions are felt where they occur rather than exported to others.  It would be a smart thing for people in these areas to prep for some economic shocks as tax reform moves forward.
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 13, 2017, 08:18:16 AM
I get it. You think I'm a mooch.

Maybe in the aggregate, longer term scheme of things you are correct.  However you can't fault people for defending their near term interests.
Should I forfeit a large chunk of my personal wealth as an act of altruism?

Because it's not just the annual deduction, if this "entitlement" went away, real estate prices would drop in some of these high cost markets.
Then I could lose the last several years of equity I've gain - or maybe more.
Title: Re: talk of reducing the mortgage deduction
Post by: Morning Sunshine on August 13, 2017, 08:21:33 AM
Another issue with building houses in California: water.

It is NOT unlimited, and the rest of in the western half of the country are getting pretty paranoid about our water.  California (and Las Vegas) are wanting more and more of our water supplies.  If our state .gov sells the water to CA, because money, we are not allowed to use it even if it is a stream flowing through our land.

I remember some CA liberal (wish I could remember who; may not have even been a CA, but she was from a coast) a few years ago complaining that when she flies over the middle of the country and looks down, she sees plenty of open places where we can build refugee spaces.  What she and many on the populated coasts do not understand: those open spaces feed the rest of the country.  And we need water to be able to do so.  Water does not just fall from the sky all the time.  It is usually only a few months a year and we have to carefully conserve that to last the whole year.
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 13, 2017, 08:24:10 AM
Some positive news: After a few months of ZERO rain, outside of Seattle it rained last night.  Hard to believe SEATTLE went nearly a quarter with no rainfall.

Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 13, 2017, 08:27:42 AM
  I remember a TV documentary about some desert people who would spend their entire lives wandering the desert looking for food and water.
They were seeking donations for food and such for these poor people who apparently could not just travel to a place that had food and water.
This also explains why no one yet,unless you believe Alex Jones,lives on the moon.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 13, 2017, 10:18:03 AM
Quote
Agreed, it s a choice.  They are using the force of government to suppress housing development driving up the price of housing.  This Not In My Backyard approach feeds a haves vs. have-nots dichotomy with the have-nots being pushed to the streets.


Most of our homeless come from out of state, they just keep going west until they hit the ocean.....realy, we do expensive homeless surveys every year, they are from out of this county or they are local and, pick one or more,  on very heavy drugs/alcohol, mentally ill, and/or are Vets.

It is off topic for this thread, the homeless problem, and it has very little to do with housing availability or prices out here. The ones in this county, cant follow rules to be in anything we try to make for them. They ruin any public facilites provided, which get to some degree provided anyway(ie, portapotties, water sources, public parks and plazas, food distributions). We need to do more for the mentally ill, big time, and I see NOTHING being done about this, I have a mentally ill older family member and know what happened when Reagan closed the state facilities, and how bad it is. I see no hope for change in this, it would cost money. We have free health care for diabetic illegal immigirants, including a ton of visiting nurses, etc... and we un-funded taking care of our mentally ill and Vets. Mentally ill that are too sick to take care of themselves and to follow rules of half-way houses have no state facility to fall back on. I know of 2 or 3 families totally lying/scamming foodstamp/medicaid, we have very little care to reign in this also, but we do not take care of our mentally ill, vets etc..... And we GIVE our addicts free needles with tie off and water, daily, as well as alot of food distributions, we do not jail any of the resulting thefts to feed teh habit, this costs us dearly.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 13, 2017, 10:21:56 AM
Water, yes water will be a big one. But, like I said upthread, they are about to open up central valley farm/ranch land to what will be big time development, and no one is talking about the WATER ! Although, maybe those people will use less water than the crops they replace. Thing is, we should be taking more care to not pave over farmland and to try and keep the USA food secure.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 13, 2017, 10:26:28 AM
As a native born Californian, and looking back at your map, I do take offense that we are supposed to house all comers, even if we dont have room, and even if it means we should pack ourselves in like rats with no room. No yards, crowded roads, you cant even get a quiet camping spot in a park for years now, too crowded, make a reservation a year ahead of time. Why should the west coast have to build up multistory, crowded housing so that everyone from around the country and around the world can move here and drive up our housing prices and ruin our quality of life ? So, this is why the older families from California keep leaving, like rats fleeing a sinking ship, to your states.....
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 13, 2017, 10:36:19 AM
  What makes California so special?
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 13, 2017, 10:42:06 AM
  What makes California so special?

? dont know. Ask them. Ideas are that Some is just illusionary, thought of what people think it is here, "coolness" factor to some. SOme is Jobs in tech or movies, etc... some is weather. Some is people who are NOT productive who come for our liberal attitudes and handouts. At this point, all of the net migration in is from other countries. It is likely pretty even of out of state moving here as longer term residents from here flee out. But, this interstate population flow isnt even, so some other states get the brunt of California outflow
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 13, 2017, 10:53:26 AM
The homeless map is deceptive.  Nevada is #4, and our housing prices are not excessive, nor is our unemployment high.

Why is our homeless population so large?  A few reasons, the most common of which is weather.  If you don't have a house to go to at night, would you rather be sleeping outside in the middle of December in Vegas or Michigan?  It's a no brainer, and like mountainmoma says, they start out in the colder climates and head west to the more temperate regions.

Also, in the case of Nevada, there's the downside to the less restrictive regulations (and I agree with fewer individual restrictions, for the record) allowing people to determine their own futures, which is that even the mentally ill, drug addicts, and chronic alcoholics have that right as well. Which means they make bad decisions, lose their jobs, lose their homes, and burn all their family/friend bridges.  Then they're homeless.  24/7 access to alcohol (we have no closing time) and gambling can drive a crappy life into the ground pretty quickly.

At one point, my state was (illegally) shipping our homeless mentally ill out to California, giving them a bus pass and a sandwich.  I highly doubt we were the only ones.  People go to areas like Vegas, Los Angeles, San Francisco and New York to start over and maybe even "make it big," and the majority fail.  If you're going to be the next "big thing" and become a millionaire entrepreneur or rock star, you're not going to pack your bags and drive your Pinto to Des Moines, Iowa.
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 13, 2017, 05:07:43 PM
Alternatively cities can welcome the unhoused with open arms:

http://www.kiro7.com/map-where-are-homeless-camps-in-seattle-/
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 13, 2017, 05:35:08 PM
Alternatively cities can welcome the unhoused with open arms:

http://www.kiro7.com/map-where-are-homeless-camps-in-seattle-/

yes, they sure do, all along the west coast, must be why they keep coming. Last month I was in Sanfrancisco, walking by one of their many homeless tent camps completely blocking the sidewalk, where my dd and I had to walk on the filthy street, with the stench of human waste and trash as they cant seem to bother going half a block to one of the conveniently situated portapotties, or trash cans the city provides. They are happy to accept the free kits to shoot up with, and hte free tents  and sleeping bags, and free food -- and the couple in one of the tents was shooting up and threw their bloody, dirty cotton ball at us. Lucky the aerodynamics of a cotton ball are poor, and he missed.
Title: Re: talk of reducing the mortgage deduction
Post by: Bradbn4 on August 13, 2017, 05:57:26 PM
So to the question of deduction of taxes for mortgage; I would vote no.  I would also vote no for deduction on State taxes.

I am not a big fan of post sales - tax...because if you are taxed after sales then you don't own it; you are just renting it.


I was surprised by the number of homeless in Hawaii 7 years ago.   Living on the beach one could make ends meet living on a small fixed income. 

Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 13, 2017, 06:05:19 PM
I am not a big fan of post sales - tax...because if you are taxed after sales then you don't own it; you are just renting it.

Agree.
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 13, 2017, 08:19:25 PM
http://www.sacbee.com/news/local/article160423019.html (http://www.sacbee.com/news/local/article160423019.html)
Sacramento sees a startling surge in homeless people. Who they are might surprise you

Homelessness rose by a startling 30 percent from 2,822 people the last time the transient population was counted in 2015, it said. It is the highest number of people living without permanent housing Sacramento has ever recorded.

About 2,000 of those counted by the survey are living outside, marking another first: More people are now living in the elements than in shelters or other emergency housing, the reverse of previous years.

The number of unsheltered homeless in the county skyrocketed by 85 percent in recent years, making up nearly half of the increase in overall numbers. About 800 of those are chronically homeless, meaning they have been homeless for more than a year or have had multiple bouts of homelessness in the past three years, and have a mental, physical or developmental disability that keeps them from working.
...

Porter, Devlin and Sturdevan highlight a trend among the long-term homeless people who spend nights in the open: The majority are from here, often living in familiar areas where they grew up or have ties to the community. Sacramento Steps Forward has found 70 percent of people it comes in contact with say they are from the city where they are currently sleeping – whether it’s Sacramento, a surrounding suburb or the unincorporated part of the county.

It’s important to own that these people on your street are your people,” said Ryan Loofbourrow, CEO of Sacramento Steps Forward. “It’s easier to think this is a tragedy that has come to us.”


http://www.sacbee.com/opinion/opn-columns-blogs/erika-d-smith/article153899264.html (http://www.sacbee.com/opinion/opn-columns-blogs/erika-d-smith/article153899264.html)

Housing crisis? What California has is a housing catastrophe

What’s more, landlords are becoming so picky that one local advocate for the homeless recently told me that, in Sacramento, many are refusing to rent to people on a fixed income, even grandmothers on disability. And they can get away with it because there’s a ready and willing pool of would-be renters who are eager to fill out applications and plop down thousands of dollars as deposit.

This has become a fairly common situation in midtown Sacramento, where the vacancy rate is less than 2 percent. But, increasingly, it’s also happening in other neighborhoods, such as Oak Park.

Where does this leave millennials and younger Generation Xers who would like to build their lives in California? People like me, for example?

For now, if we’re lucky, it looks like renting until we have a head full of gray hair. A recent survey from ApartmentList.com found millennials in Los Angeles, San Francisco, San Diego and San Jose will have to wait almost 20 years to save enough money for a 20 percent down payment on a house or a condominium.

If we’re not so lucky, we’ll be living on the streets.

Last week, L.A. County released data from its latest Point in Time count of homeless people and found their numbers jumped by 23 percent over the past year to about 58,000 people. That’s despite getting about 14,000 people off the streets and into permanent housing, using rent subsidies, new construction, outreach and support services.

That’s a suburb, 58,000 people. The cost of housing just outpaced the county’s efforts.

“There’s no sugarcoating the bad news,” L.A. Mayor Eric Garcetti said at a news conference on Wednesday. “We can’t let rents double every year.”

Sacramento County will release it’s Point in Time count in early July, and there’s no reason to believe it will be any better.

Orange County reported an 8 percent jump in its homeless population over the past two years, with more than half of the county’s 4,800 homeless living outside. Santa Monica had a 26 percent spike, reversing years of declining numbers.

Something has to give.

I suppose we should be grateful that the Legislature is finally tackling the housing catastrophe. The Senate passed a package of bills on Thursday, some that streamline regulations to break the near standstill in the residential development and others that creating new sources of funding to build and help Californians access affordable housing. All told, more than 100 such bills were introduced this year.


http://www.latimes.com/local/california/la-me-latino-homeless-20170618-story.html (http://www.latimes.com/local/california/la-me-latino-homeless-20170618-story.html)
Surge in Latino homeless population 'a whole new phenomenon' for Los Angeles

“I would say it’s a whole new phenomenon,” said County Supervisor Hilda Solis, whose district saw Latino homelessness go up by 84%. “We have to put it on the radar and really think outside the box when we consider how to help this population.”

Homeless officials and outreach groups say Los Angeles’ rising rents and stale wages are the main drivers pushing many out of their homes.

According to a study released by the Homeless Services Authority, renters living in Los Angeles are the most cost-burdened nationwide. More than 2 million households in L.A. and Orange counties have housing costs that exceed 30% of their income.


Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 13, 2017, 10:42:10 PM

I'm not sure what the point is of you quoting some newspaper about Sacramento when we were talking about Silicon Valley area and the homeless population out here. The numbers in the article about Sacramento are not the same as the numbers in this area of California. I also notice that they were very careful not to tell you the numbers of how much of the surging unhoused in LA are local vs recently moved into that area.....

I am sure our state government will be sure to give more help to LA and southern CA and the surging immigrant population while continuing to ignore and not fund the mentally ill.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 13, 2017, 10:52:31 PM
And, my main point still stands, when do we say "enough",  that a community has enough people ? Do people have a right to live in an area that they cant afford ? Should the State be subsidising them to do so ? Would it be better for the state to pay for housing in a less expensive area for them ? Has state built low income housing ever worked out well in the long run ? If you cant afford to buy a house in the area your parents live in, does someone or the state owe you, should they be subsidising you and make it so you can live in a neighborhood or city that is our of your price range ?
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 14, 2017, 04:32:05 AM
  When I throw bread on my driveway , birds show up,they eat the bread and more show up the next day demanding bread and pooping on my car.
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 14, 2017, 05:53:13 AM
I'm not sure what the point is of you quoting some newspaper about Sacramento when we were talking about Silicon Valley area and the homeless population out here. The numbers in the article about Sacramento are not the same as the numbers in this area of California. I also notice that they were very careful not to tell you the numbers of how much of the surging unhoused in LA are local vs recently moved into that area.....

The housing crisis is everywhere in California as NIMBY is becoming a standard part of the culture.  It is difficult for charities to combat and thus help people in an environment where empathy has been purged.

I'm not sure what the point is of you quoting some newspaper about Sacramento when we were talking about Silicon Valley area and the homeless population out here. The numbers in the article about Sacramento are not the same as the numbers in this area of California. I also notice that they were very careful not to tell you the numbers of how much of the surging unhoused in LA are local vs recently moved into that area.....

https://www.thenation.com/article/silicon-valley-has-a-homelessness-crisis/ (https://www.thenation.com/article/silicon-valley-has-a-homelessness-crisis/)

Silicon Valley Has a Homelessness Crisis

For years there has been a dramatic contrast between the concentrated wealth and political influence of the creative classes and the swelling homelessness epidemic in gentrifying cities like San Francisco and Oakland. Next door to the houses of young tech startup executives, families sleep in parked cars, while many workers must pay more in rent than they earn in wages. The Guardian recently reported that in East Palo Alto, one-third of schoolchildren are estimated to be homeless, meaning they have no secure form of shelter. More than 10,000 homeless people were stranded across San Jose and Santa Clara Counties last year on any given night, including hundreds of families with children. And that number doesn’t include the “hidden homeless,” the countless people without their own shelter who “double up” at friends’ houses. Sprawling homeless encampments dot the Bay, and the crisis is so endemic in some communities, activists have begun establishing homeless trailer camps in church parking lots.

Though some people experiencing homelessness suffer from drug abuse and mental illness, many others are ordinary working parents, excluded from the job market or priced out of the housing market. Though the speculative real-estate spiral has eased slightly in recent years, renters struggle against structural economic barriers. Some 70 percent of surveyed residents in San Jose cited high rent as the primary cause of homelessness. A growing proportion, 15 percent, report not only prohibitively high rent but total lack of available housing, up from 11 percent in 2011—suggesting that housing is moving from unsustainable to outright inaccessible.


And, my main point still stands, when do we say "enough",  that a community has enough people ? Do people have a right to live in an area that they cant afford ? Should the State be subsidising them to do so ? Would it be better for the state to pay for housing in a less expensive area for them ? Has state built low income housing ever worked out well in the long run ? If you cant afford to buy a house in the area your parents live in, does someone or the state owe you, should they be subsidising you and make it so you can live in a neighborhood or city that is our of your price range ?

People most certainly have a right to a free economy.  Let the government get out of the way so prices can moderate and people can afford to live.  Most certainly dont exacerbate the problem through a reverse Robin Hood tax policy.
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 14, 2017, 06:18:49 AM
More perspective on silicon valley.

http://sanjosehomeless.org/why-are-there-so-many-homeless-people-in-san-jose-part-1/ (http://sanjosehomeless.org/why-are-there-so-many-homeless-people-in-san-jose-part-1/)
Why are there so many homeless people in San Jose: Part #1

Why do so many homeless people live outdoors in Santa Clara County?

How did we win that ignominious prize?

Answer #1:

Many people think it’s because we have a lot of homeless people.  That is true.  We do have a lot of homeless people, but not more per capita than many other large cities. Indeed, New York, San Francisco, Seattle, and Portland all have more homeless residents per capita than we do.

The really striking thing about Santa Clara County is how few shelters we have.  Very few people know this.  I started to suspect we were on the left end of the bell curve after hearing multiple patients explain how they had tried to get into shelters but were unsuccessful because they were all full.  I had also had interactions with the homeless in Seattle, Portland, and a small town in Oregon, and it seemed to me that there was a different emergency housing milieu that what patients were telling me about in San Jose.  A clinic volunteer found great data from the federal government (HUD), and we were able to compare our county’s information with the country’s other large cities. 
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 14, 2017, 08:34:22 AM
I do find it odd that, in a forum where the prevailing goal is self sufficiency, we're arguing for the right to lower housing prices instead of letting them be what the market will bear.

If people were unwilling to pay the enormous prices of houses in the most expensive cities, they wouldn't.  Prices would go down because people would live elsewhere, especially in a world where you're not as tied to a physical workplace as in the past.  But people do pay, sellers/landlords have the right to charge what they want, buyers/renters that think it's too much aren't required to buy it, and the market evens out at the intersection of what people are willing to accept and others are willing to pay.

The homeless situation is absolutely not the result of high housing prices.  Seven years ago, you could have bought a decent house in a good Vegas neighborhood for under $100,000 easily.  You could rent a nice apartment for $700 per month.  And we still had a homeless problem.  There are homeless going back to biblical times.  There will always be homeless people.

If you want to blame something for the current uptick in homelessness, blame heroin, meth, alcoholism, PTSD, untreated mental illness, child abuse, and excessive jail time for unpaid fines.  Those seem to be more directly related to someone ending up on the streets than anything else.
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 14, 2017, 09:09:56 AM
If people were unwilling to pay the enormous prices of houses in the most expensive cities, they wouldn't.  Prices would go down because people would live elsewhere, especially in a world where you're not as tied to a physical workplace as in the past. 

I could do 95% of my work remotely from anyplace with reliable internet.  The ridiculous thing is that tech companies WANT to be in these hot areas. The explanation is Silicon Valley/Seattle/Austin is where the talent is. Ironically employee attrition is far higher in such markets, because it's extremely easy for competing firms to poach the best talent.

We have offices in Seattle and SF bay area.  For the junior engineers, more than 50% quit to join a sexier company like Netflix, Google or Apple.  They just "use" us to get a year or two of work experience on the resume.

Why not setup shop in western Montana or other rural, but scenic location?  You could pay people 30% less salary and the lifestyle would still be higher.
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on August 14, 2017, 09:17:57 AM
  Does Montana still use dial-up with 1200 baud modems?
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 14, 2017, 09:24:16 AM
  Does Montana still use dial-up with 1200 baud modems?

Nah dude, that's a vicious stereotype.  They are up to 9600 these days.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 14, 2017, 09:49:19 AM
Quote
The housing crisis is everywhere in California as NIMBY is becoming a standard part of the culture.  It is difficult for charities to combat and thus help people in an environment where empathy has been purged.

I think you should just talk about the homeless and charities in your area, where you know what people around you think. People here are so empathetic that it is absolutely ridiculous what is put up with, what would never be put up with somewhere else. In my area ( I am no longer right in Silicon Valley) ie.,working people used to not being able to use sidewalks, parks, public bathrooms, no-one is hungery or without ways to keep warm, you would have to kill someone to get incarcerated, you dont even spend 1/2 a day for theft, routine theft, etc...no waiting in a cell if you dont have bail. We give them ways to use drugs, etc... Out tented up areas are no so bad as Seatle, probably as our weather is milder.

Anyway, there has been no purging of empathy. One of my children who is still around here, and is a liberal journalist for one of the papers, even he says, as hard as housing is here, that people like his peers who grew up here who find it unaffordable should move.

Those children in East Palo Alto are not living in tents on the streets, and I cannot speak to what their solutions would be. Likely what similar families here are up to though. After a while of finding an area unaffordable, couch surfing, etc.... it is likely time to think you would have  better quality of life somewhere else, and we realy should have better counseling and resources to help people figure out how to take care of themselves, the EDD etc... are a complete joke out here. And I am not NIMBY saying this, these are the conversations I have for myself and my family, it is a matter of when and where, not if, for use leaving. Everyone one, just about. That is what they talk of and do. Sometimes to  more affordable area of California, an aquaintance of mine, a single mom with a chronic ill toddler, finally stopped struggling here and moved to a very affordable city in California.

Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 14, 2017, 10:51:03 AM
I could do 95% of my work remotely from anyplace with reliable internet.  The ridiculous thing is that tech companies WANT to be in these hot areas. The explanation is Silicon Valley/Seattle/Austin is where the talent is. Ironically employee attrition is far higher in such markets, because it's extremely easy for competing firms to poach the best talent.

We have offices in Seattle and SF bay area.  For the junior engineers, more than 50% quit to join a sexier company like Netflix, Google or Apple.  They just "use" us to get a year or two of work experience on the resume.

Why not setup shop in western Montana or other rural, but scenic location?  You could pay people 30% less salary and the lifestyle would still be higher.

That's actually why Vegas is doing much better than we logically should be.  With land for miles, no state income tax, relatively low cost of living, no real natural disasters to speak of, and a pro-business low regulation attitude, we're getting a whole lot lot of up and coming companies relocating to here.

I see some really big names plastered across buildings on my way home now, especially in the last five or six years.

Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on August 14, 2017, 11:12:39 AM
That's actually why Vegas is doing much better than we logically should be.  With land for miles, no state income tax, relatively low cost of living, no real natural disasters to speak of, and a pro-business low regulation attitude, we're getting a whole lot lot of up and coming companies relocating to here.

I see some really big names plastered across buildings on my way home now, especially in the last five or six years.

After college I had some IT friends relocate there.  Buying a 2000sq ft house with a pool in Henderson for less than their Orange County apartment cost to rent seemed like a slam dunk.
Shortly after the real estate went bust.  Have you all recovered?

While I haven't spent any considerably time in Las Vegas, I get the impression that no one is really from there.  I know logically someone must be, but I have yet to meet them.
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on August 14, 2017, 11:21:38 AM
After college I had some IT friends relocate there.  Buying a 2000sq ft house with a pool in Henderson for less than their Orange County apartment cost to rent seemed like a slam dunk.
Shortly after the real estate went bust.  Have you all recovered?

Very well, really.  Our unemployment was up to 14.1% during the height of the financial trouble, but it has been low for ages since.  We're at 5% now, which isn't amazing, but when you consider our workforce is largely uneducated beyond the high school level and we were literally the worst in the nation as far as unemployment for several years running, it's pretty good.

The powers that be run the government fairly intelligently.  State workers were given pay freezes and mandatory unpaid furlough days when it was really bad and not much money was coming in.  When the economy recovered, they resumed pay increases and dropped the furlough days.  Now they just approved a 2% COLA increase, which the governor upped to 3% for the next two years.  State workers also contribute 14.5% of their gross pay to their own pension fund, which is relatively well managed.

I think they figured out that the economy wasn't diverse enough, based almost completely on construction/real estate and tourism.  Now they're courting tech, entertainment, shipping, and other companies.

While I haven't spent any considerably time in Las Vegas, I get the impression that no one is really from there.  I know logically someone must be, but I have yet to meet them.

Not very many.  I'm almost considered a local because I've been here for 20 years.  It's rare to meet someone over 30 that was born here.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on August 14, 2017, 12:39:50 PM
For the purposes of surveys on housing, etc.... out here, you are local when you have been here for just a few years. Not that anyone has some kind of right to be able to afford a house where they grew up. But, I am one of a minority that was born in Silicon Valley, before it was Silicon Valley. Most people out here are also from somewhere else, even if they count as local in a housing survey. My aquaintance with the chronically ill toddler was considered local here, as she had been here many years, maybe even. But, the realy cheap housing city in California that she just moved to is actually where she grew up. She would have been counted as a local housing stressed family in this area when she was here. If you go to the UC here and stay on couch surfing, you are a unhoused local.
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on August 27, 2017, 02:29:35 PM
I think you should just talk about the homeless and charities in your area, where you know what people around you think. People here are so empathetic that it is absolutely ridiculous what is put up with, what would never be put up with somewhere else.

Locally we don't have the high costs of housing so we don't have the shelter capacity issue like California.  In fact, our services have moved ''upstream" to trying to stop people from becoming homeless in the first place.  Two I have been involved in are seasonal food security (through food bank) and energy security (lobbying for changes in law to allow utilities to 'smooth' bill payments from winter heating).  We have also been transitioning from emergency shelters to long-term shelters with specialized help  Examples are shelters for domestic abuse victims, alcohol/drug addicted, and veterans.  This way the root of the problem can be addressed.  Of course, I agree that there may always be chronic homeless due to other issues like mental health.  But these are a smaller portion than what people realize.  It is usually life changing events which create homelessness.

Right now in California it is a matter of triage.  The charities there are overwhelmed and can't even provide enough short-term beds.  And that is why there are so many 'empathy' projects active in California trying to get people involved: http://www.wnyc.org/story/trying-promote-empathy-homeless-tech-driven-san-francisco/ (http://www.wnyc.org/story/trying-promote-empathy-homeless-tech-driven-san-francisco/)

The homeless situation is absolutely not the result of high housing prices. 

We will have to disagree on this point.  Housing prices are the primary cause of homelessness.  Every institution for the homeless says this based on their on the ground experience and studies.  If people can't afford shelter they won't be sheltered.  And in California homeless charities are often priced out of the market or are stopped via NIMBY zoning.  Here is how the National Coalition for the Homeless puts it:

http://www.nationalhomeless.org/factsheets/why.html (http://www.nationalhomeless.org/factsheets/why.html)

Two trends are largely responsible for the rise in homelessness over the past 20-25 years: a growing shortage of affordable rental housing and a simultaneous increase in poverty.

A more in depth study was done by a homelessness activist in silicon valley.  She quantified the direct relationship and debunked the notion that the homeless flock to wealthier areas:

http://sanjosehomeless.org/the-wealthier-the-city-the-fewer-the-homeless-shelter-beds/ (http://sanjosehomeless.org/the-wealthier-the-city-the-fewer-the-homeless-shelter-beds/)

(http://sanjosehomeless.org/wp-content/uploads/2015/04/Median-Housing-Price-of-Number-of-Homeless2.png)

(http://sanjosehomeless.org/wp-content/uploads/2015/04/Median-Income-Number-of-Homeless.png)

The analysis also confirms the inverse relationship between number of shelters and median income (the so-called empathy gap)  Many social scientists feel this is also related to church attendance as churches are the primary recruitment means for shelter manpower and donations.

(http://sanjosehomeless.org/wp-content/uploads/2015/04/Median-Income-Emergency-Beds1.png)

But the craziest part of it is that a new type of homeless has emerged in Silicon Valley.  These are people who work at places like Facebook and Google and earn more than the median national wage.  Yet they can not afford (or in some cases even find) permanent housing.  So they are living out of vehicles.

And in general the homeless in California are primarily from California.  The way the surveys work is that they ask a person when and where they became homeless.  Then they ask how long they were in that place before becoming homeless.  As an example. in San Francisco about 50% of the homeless lived in California for more than 10 years before becoming homeless.  Generally, the homeless don't have the means for cross-country travel.
Title: Re: talk of reducing the mortgage deduction
Post by: osubuckeye4 on September 01, 2017, 10:31:54 AM
Reducing the mortgage deduction could stabilize the housing market to some degree.

It would also most likely completely screw over middle class/upper middle class homeowners who are counting on that deduction to finance their lifestyle/obligations.



If the plan is to create a dystopian society where a couple families control everything and 99.999% of people fight over scraps, this would be a logical step towards making that happen.
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on September 01, 2017, 12:11:10 PM
  That or they can just confiscate a large percentage of bank and retirement funds or convert to a different money like the peso and make everyone equal again so we can start over...it's been done in other countries already.
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on September 01, 2017, 12:16:26 PM
  That or they can just confiscate a large percentage of bank and retirement funds or convert to a different money like the peso and make everyone equal again so we can start over...it's been done in other countries already.

reminds me of some post-WWII keepsakes from my grandfather

(http://tomchao.com/as/phil6fx.jpg)
Title: Re: talk of reducing the mortgage deduction
Post by: David in MN on September 05, 2017, 02:51:15 PM
I guess losing it would decrease the value of my house. But it would encourage a healthier housing market where incentives are more straightforward. There's a general pervasive attitude that to be successful you need to own a house. Even though many economists will say otherwise we all know our housing effects our tax bill and our childrens' education. My elementary school is recognized as one of the best in the state. There are no houses for sale in my city.

You guys who take the standard deduction need a new tax attorney...
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on September 05, 2017, 05:41:05 PM
So it appears fed policy may partially be the impetus for this change.   The fed wants to be able to cut off an inflation spike with an interest rate hike.  With the most current hikes there has been some leeway with treasury demand so mortgage rates haven't moved up much in response.  But any new large hike in rates will be met with a sharp increase in mortgage rates and therefore interest payments, especially on the variable market.  This will dramatically increase the amount of deductions thereby decreasing tax revenues and making a giant budget hole.  The government will either respond by printing more money (possibly exacerbating the inflation the fed is trying to avoid) or borrowing at a quick pace (causing a market crash and potential deflationary spiral). Net it is a potential domino which will cause many others to fall just like sub-prime lending was in 2007/8.  In fact, it is almost the same dynamic of subsidizing people on the financial margin, only across a broader range of income.

Over the last week the fed has been releasing some figures on the potential drop in housing prices from this.  The estimates are about a seven percent short term drop.  This is relatively small compared to the recent rises (especially in bubble markets out west) so they may be seeing this as an opportune time to neutralize the threat.

Regarding the California housing crisis, a fantastic detailed analysis was just released:

https://calmatters.org/articles/housing-costs-high-california/#just-how-hard-is-it-to-buy-a-home-in-california (https://calmatters.org/articles/housing-costs-high-california/#just-how-hard-is-it-to-buy-a-home-in-california)

Imagine if all journalism was this clear!
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on September 05, 2017, 08:22:55 PM
Salient quotes from IA4L's article:

Quote
Housing costs are just one factor in the complex tangle of reasons people become homeless. California actually has fewer people experiencing homeless now than it did a decade ago. But there’s little question rising rents are linked to more  Californians living in cars, shelters, and on the streets—especially in the greater L.A. area.

Quote
construction costs are only part of the problem. And sometimes a relatively small part at that.....In most of the state’s major urban areas, the bulk of a single-family house’s price is locked into the land it sits on. That high price tag on the cost of actually buying a parcel and prepping it for construction not only makes new housing more expensive, it influences what kind of housing gets produced: developers prioritize high-end projects, since even the cheapest pre-fab unit will come stuck with a steep fixed cost.

What makes land expensive? When it’s in shortest supply. Take San Francisco: Seven-by-seven miles of hillside penned in by water on three sides. Of the top 15 most physically constrained metro areas in the country, seven dot California’s oh-so-desirable coast....
   
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on September 05, 2017, 09:03:14 PM
Salient quotes from IA4L's article:
 

The "..." is the most important from a policy perspective:

What makes land expensive? When it’s in shortest supply. Take San Francisco: Seven-by-seven miles of hillside penned in by water on three sides. Of the top 15 most physically constrained metro areas in the country, seven dot California’s oh-so-desirable coast. But many of those same coveted locales place additional limits on where—and when and how and how much—construction can take place. That all makes it that much harder for housing to keep up with population growth. And over the last decade, it has not.

And the corresponding reasoning:

In California, you’re most likely to find these extra restrictions where developable space is already scarcest—in coastal urban enclaves.

Local pushback might be rooted in concerns about the environment, about congestion, about the creep of gentrification, or in a desire to preserve the “character” of the neighborhood (however that might be defined). But whatever the flavor of NIMBYism and whatever its ultimate goals, higher hurdles to development in the state’s most desirable locations mean many cities have failed to add new units fast enough to keep up with population or job growth.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on September 05, 2017, 10:10:23 PM
The "..." is the most important from a policy perspective:

What makes land expensive? When it’s in shortest supply. Take San Francisco: Seven-by-seven miles of hillside penned in by water on three sides. Of the top 15 most physically constrained metro areas in the country, seven dot California’s oh-so-desirable coast. But many of those same coveted locales place additional limits on where—and when and how and how much—construction can take place. That all makes it that much harder for housing to keep up with population growth. And over the last decade, it has not.

And the corresponding reasoning:

In California, you’re most likely to find these extra restrictions where developable space is already scarcest—in coastal urban enclaves.

Local pushback might be rooted in concerns about the environment, about congestion, about the creep of gentrification, or in a desire to preserve the “character” of the neighborhood (however that might be defined). But whatever the flavor of NIMBYism and whatever its ultimate goals, higher hurdles to development in the state’s most desirable locations mean many cities have failed to add new units fast enough to keep up with population or job growth.


The article did put what I have seen as a usual reason, it is that, I am going to paraphrase rather than look it up, it is that a homeowner does not want a multistory multiunit housing unit "shading their garden" -- so, yes, a biased way of saying it, but yes, no-one wants the single family home neighborhoods to go to multi-story, multi-units. It would change the character.

Havent you seen those rat experiments ? People and rats do better when not over crowded !

If you look at the charts in the article, you see that housing has been increased, alot ! More than it should in alot of places.

You are emphasizing regulations. the article does not give that as much weight, in my reading. It is scarcity of any available land. And, as a secondary, regulations DO keep single family housing from being replaced with multi-units. Except -- and this is a big except, and I have seen it is San Jose -- they go ahead and rezone an area to allow multi-unit housing and the single family area or block is razed and the new units built, and they are each now more expensive to rent than the single family home that were tore down. So, when it has been done, it has not made housing more affordable, it just leads to more gentrification.

The other thing, which we also see all the time, and the article mentions, is that since the land is so scarce, most of the cost of the house is the land, by an awful lot. So, once you are in that price range, the only people that can afford to live there have money, and the people with money want certain ammenities and size, and so that is what is built. You cannot build "affordable housing" units on land that expensive. No matter single family home or multi-unit. The only way to have "affordable" units is with heavy subsidies by the government, or forced by the government onto the developer, and so the rest of the home buyers subsidize it by paying xx% more on their home to subsidize the 2 or 3 affordable houses.

if an empty lot in an area of houses costs 400,000 to 1,000,000, depending on where it is -- how can that ever be affordable housing ? And, in what manner do you think regulations could ever fix that or are causing that ? It is caused by lack of available land.
Title: Re: talk of reducing the mortgage deduction
Post by: iam4liberty on September 05, 2017, 11:23:32 PM
if an empty lot in an area of houses costs 400,000 to 1,000,000, depending on where it is -- how can that ever be affordable housing ? And, in what manner do you think regulations could ever fix that or are causing that ? It is caused by lack of available land.

Not regulation, deregulation.  Remove regulations.  When one is in a hole, stop digging. Or perhaps a closer analogy, dont throw gasoline on a fire when you want to put it out.

The graph in the article shows the situation in California is not a natural market.  This bubble needs deflating before it collapses the economy like it did the last time. The below map shows the 2008 crisis areas. These are the areas we need to monitor for recurring bubbles.

http://ritholtz.com/wp-content/uploads/2009/01/foreclosure-heat-map-2008totals.png]http://ritholtz.com/wp-content/uploads/2009/01/foreclosure-heat-map-2008totals.png]http://ritholtz.com/wp-content/uploads/2009/01/foreclosure-heat-map-2008totals.png (http://ritholtz.com/wp-content/uploads/2009/01/foreclosure-heat-map-2008totals.png)

There are three immediate steps which can be taken and they are the ones being called for by most policy analysts:

1. Eliminate mortgage deduction while increasing standard deduction.  This removes one incentive for misallocation while maintaining overall rate levels.
2. Replace the subjective, politically driven building code with a uniform, objective one. 
3. Repeal the small number of environmental study laws which are being abused.

In short, let the developers have a shot at filling some of the demand.  Just a couple areas for middle class people like developed on the East Coast would do wonders. 

And to answer point on land, again the population density of california cities are way below those of corresponding East coast cities.  So it is a land use not amount issue.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on September 06, 2017, 01:00:53 AM
I understand that it seems to you, based on numbers, that housing can be more dense n the CA cities. But, in the areas I live in and by, they are already built out ! So, maybe they could have been developed denser, but at this point, you realy cant take an existing neighborhood with large lots and redo it. They have done it on new houses, and in general, it is horrible, yards too small to grow a garden in !

A city by me, they are, in theory, allowing everyone with certain sized lots to build a second unit in their back yard. With many strings attached, like trying to make it so that they can only be rented for below market rent as affordable housing. So, not much of that is done, because why would anyone want to give up their garage or backyard to a person or people that they dont get to choose for money that they dont feel is worth giving up the privacy for ? There are quite a few unpermitted, illegal units done like that though and rented out for market rates, or, at this point, they are air-b-n-b, as that pays well and has less tenant problems and air-b-n-b short termers do not call building dept on them.

I do not see too much building code problems, (some by me, but it isnt related to topic here as coastal commission doesnt have say over much of CA). What I have seen, when I lived over the hill was building codes holding down sizes of remodels, barely. And for good reason ! What I also see is unbearable pressure by the state, to everyone except Marin county, to try and force building of new units, even when all land is already built up. I also see rezoning. I also see multiunit high ( well, relatively higher, anyways) buildings going up, usually subsidized, and still unaffordable. Units in the city subsidized condo place went vacant for a very long time, as it was expensive. Because land was expensive that it was built on ! A new hi-rise being considered is in a downtown area of a city, totally built out and land locked, that has no existing structures over 3 stories, under pressure from the State considering a 10 story multi-unit. And no-one wants it, there is such severe outcry, I doubt it will be done. The rezoning of a commercial area to allow housing is being done.

I realy do not understand why outsiders consider it NIMBY-ism for a community to want to stay being a small or mid sized community ? Why should people have to cave to developers who make money and ruin an area, so the developers who do not live there make money, and the people who live there have a reduced quality of life ? The people who live in the communities, the ones who have to live with the consequences are the ones who insist on building codes that preserve the communities they bought their homes in. Makes sense to me.

How much is enough ? When is an area "full" ? Do people have a right to move wherever they want to and then demand housing and services to be provided by the existing population ? Should companies build facilities where their employees can make it, instead of an area with no housing ?

I love fairness in codes and repealing the ridiculous, and there are some. But, that is not going to make more housing here. The fair codes will fairly not allow single family neighborhoods gutted. The few areas hampered by over-zealous reviews are realy not many areas, as that is only done to unbuilt areas and we realy have very little to none unbuilt -- so those 2 items are not going to make enough housing in the greater SF bay area for all comers.

As I mentioned before, they have a "solution" and that seems to be making Merced, etc... into defacto bedroom communities for Silicon Valley via the new high speed rail. Not that I like it. But, the developers will make their money, and the stae will point to new units...
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on September 06, 2017, 03:32:57 AM
  This just sounds like personal attitude has limited the living space and ultimately caused it to be too costly to live in some areas.
I have to ask MMOMMA ,How did this effect your decision to convert your own home to a family house + apartment?
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on September 06, 2017, 09:58:39 AM
  This just sounds like personal attitude has limited the living space and ultimately caused it to be too costly to live in some areas.
I have to ask MMOMMA ,How did this effect your decision to convert your own home to a family house + apartment?

I realy do not understand what you mean ? Dont most people here live in single family homes with yards ? Why do you do so ? Likely because people prefer to !

Carl, please explain how personal attitude has limited living space ? Since this is written, let me make it clear that I am not "mad" or anything, I truly do not understand what you guys mean. I live out here, I have responded to "add light" to what you all read. Some real, on the ground experience to it. But, somehow you guys do not believe that the areas I am familiar with are out of room ? ( I know nothing about LA or southern CA, btw, and we have very big regional differences on these problems in the various areas across the state. I live in what you might call the greater SF bay/Silicon valley area). Do you believe that developers should be able to buy a house in a single family home neighborhood and make it into a multi story condo complex ? How do you think that cities with no more room, land is built on, for the most part,  are supposed to make more housing ? They do make more, rezone scraps of land that get deserted by industry, for example, but the demand is higher than what can be done. I guess it is hard to imagine when you live elsewhere ? Yes, later housing that was developed when the demand became obvious were built with mico-yards, more condos, etc....



How did all this affect my personal decision ? Well, I got tired of sharing a kitchen with roomates. Now, the UC by me HAS land, it could in theory build enough housing for its students, the town next to it is out of room. There is ongoing tension and "talks" over this. City and County cannot dictate to the University system to make them build housing, they do put pressure there, of course. The UC has built housing on campus, very nice single family homes, that it rents to teachers and staff to help with staff retention.

So, I answered your question, here are mine, recopied from my above post :

Quote
I realy do not understand why outsiders consider it NIMBY-ism for a community to want to stay being a small or mid sized community ? Why should people have to cave to developers who make money and ruin an area, so the developers who do not live there make money, and the people who live there have a reduced quality of life ? The people who live in the communities, the ones who have to live with the consequences are the ones who insist on building codes that preserve the communities they bought their homes in. Makes sense to me.

How much is enough ? When is an area "full" ? Do people have a right to move wherever they want to and then demand housing and services to be provided by the existing population ? Should companies build facilities where their employees can make it, instead of an area with no housing ?
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on September 06, 2017, 03:24:10 PM
  I only sought better understanding of the situation where PEOPLE,not just your situation,reject the multifamily apartment type housing when population of an area pretty much dictates the necessity of such construction. I did not understand the strength of your thoughts on the matter and knew of your room-mate situation as you completed your apartment . I have lived in apartments,roommate situations,trailers,campers,the woods,and now a 4 bedroom house plus a secure BOL with just me and a dog but none of my living spaces were dictated by opinion,just need. I see it hard to live the high costs and taxes just to enforce one live in one's own house with limiting the growth....though I did move my home some 10 years ago for this very reason...to avoid crowding. My/our questions were not personal though your strong opinion of how things should be appeared contradictory to how things were to be. Eventually the masses will win and larger,taller,living spaces will win.

  But as I asked ,the area housing problem is generated by the refusal to change and not by other outside forces. I was just trying to understand a thing that is not such a big part of life where I live and better understand how these things can happen in an area. I don't care for crowding myself and the exposure to the inevitable crime that such conditions can bring though I know of no such housing being blocked from construction anywhere in my part of the state.

  I imagine the same ideas would be thought odd in a city like New York...which I think has gone way to far as to how people live too...

Just another sign that even in the same country,customs can vary greatly.
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on September 06, 2017, 05:37:41 PM
I question the assumption that areas have to be forced to always get larger or more populous. I wonder if there is a point of "enoughness" we are full. I wonder why people think that all comers have to be able to stay, if they can find a spot to live and a job, sure. But, are they owed accomodation just because they want to be there ?

I think these are valid questions. It may look different to me as people just head west until they cant anymore and here they are. Other parts of California, and according to Rita, Nevada, have been documented giving people one way bus tickets to here. Other people move here as the greater area has a reputation as a "boom town" of sorts. That doesnt mean the area has a good job for them or housing. Should an area somehow accomodate all who come ? And, if so, why ? Should we then use emminent domain to raze existing housing, in areas that are landlocked and have no more undeveloped lots, and put up apartments for them ? I do not have the answers, but these are my questions.

And, actually, these are questions that are being asked all over the world, maybe especially europe and the more crowded areas of California
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on September 06, 2017, 05:54:42 PM
  I try to understand the population density of New York the same way...why did so many want to live in a more dense and inhumane environment that we would raise chickens in?
Title: Re: talk of reducing the mortgage deduction
Post by: Morning Sunshine on September 06, 2017, 06:25:28 PM
  I try to understand the population density of New York the same way...why did so many want to live in a more dense and inhumane environment that we would raise chickens in?

I think some people are afraid of being alone, of hearing their own thoughts.
I think some people like the bright lights, the crowds, the fashion.
I think some people were born there and have never seen the stars on a clear night or heard the chirping of crickets in the silence.

Title: Re: talk of reducing the mortgage deduction
Post by: Carl on September 06, 2017, 06:37:38 PM
  We are a product of our environment .
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on September 06, 2017, 06:43:14 PM
Also, the US has become a nation of employees, and not business owners (farmers, blacksmiths, miners) like they were 100 years ago.  Being an employee requires being in close proximity to the business employing you, and businesses tend to be around population centers so they can find those employees as well as supplies and materials.

The internet has helped somewhat, and allowed people to telecommute or freelance, but employers will often require even telecommuting employees to come to the office a day or two per week.

All those people and businesses take up land, and when you have a whole lot of people/businesses all wanting to be in the same area, prices naturally go up.

Add in that utilities are very expensive to bring out to outlying areas where people aren't already living, and it's just not feasible for most people to live away from population centers.

Personally, I'm actively trying to work my life so I can be away from the masses at some point, but it's certainly not easy, and I haven't quite been able to do it yet.  But I'm working on it.
Title: Re: talk of reducing the mortgage deduction
Post by: David in MN on September 06, 2017, 08:03:35 PM
I liked living in Minneapolis in my 20s. Not NY or San Fran or Chicago but a big enough city. When you're young you can walk to dinner or the local bar. Take a bus to the theater. It's a fun carefree life where you run into friends on the sidewalk. But eventually you've heard enough gunfire and your wife gets mugged.

I think it's about where we are in life. When you're 23 you don't mind a roommate but as we get older we value space more.
Title: Re: talk of reducing the mortgage deduction
Post by: Stwood on September 06, 2017, 08:58:44 PM
Yes. Big cities were interesting and had lots of attractions back in the day.

Now, I want (and have) my own space, with who I want around me.
Title: Re: talk of reducing the mortgage deduction
Post by: David in MN on September 07, 2017, 05:06:53 AM
This is something we deal with every year. We want to move more rural and have more land. If we did I would put up orchards and vineyards and grow much more food. I've kind of maxed out my .25 acre backyard. My wife would also like to shoot her bow on our land and not have to travel to the archery range.

But...

Many of the areas with land around us have dramatically higher property taxes and we currently live in one of the best school districts (not so when we moved in 11 years ago) and don't want to lose that option for our daughter. I'd gladly homeschool but it's a nice option to have. So getting what we want will cost us probably both ways.

I guess you could flip it around and claim (rightly) that my house is highly bid up because of these reasons and I'd get that value in the sale. But eliminating the tax credit could also raise the value as I live in a low tax city.

What I'm really getting at is that I don't live in my house because we love it or really want to live here. It's a fine house but our lifestyle dictates otherwise. It's literally government policies that keep us here.
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on September 07, 2017, 08:28:45 AM
I'm rather aware of my tax foot print.  We pay state gas taxes and next year my state will pilot a new mileage based car tax in addition.  Sales tax is above 10% now.  We don't have state income tax (yet), but have higher property taxes.

If the deduction just vanished and I couldn't make it up another way, I'd likely plan on some big life changes soon.

For example, I ride a regional express bus every day to and from work.  Employer pays for the transit pass.  Not only does that save me $5 round trip fare, but I also avoid paying $15 or more to park in the city each day.  Add in gas and car maintenance, that's a lot of money each year.

If parking was free, I'd probably drive more.  On the inverse if my transportation was 4x more expensive, a condo in the city has some appeal.

Of course this all assumes my employment circumstances remain static.
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on September 07, 2017, 10:53:44 AM
I'm rather aware of my tax foot print.  We pay state gas taxes and next year my state will pilot a new mileage based car tax in addition.  Sales tax is above 10% now.  We don't have state income tax (yet), but have higher property taxes.

If the deduction just vanished and I couldn't make it up another way, I'd likely plan on some big life changes soon.

For example, I ride a regional express bus every day to and from work.  Employer pays for the transit pass.  Not only does that save me $5 round trip fare, but I also avoid paying $15 or more to park in the city each day.  Add in gas and car maintenance, that's a lot of money each year.

If parking was free, I'd probably drive more.  On the inverse if my transportation was 4x more expensive, a condo in the city has some appeal.

Of course this all assumes my employment circumstances remain static.

I pay about $275 per year to park for work, which seems like a lot to me until I talk to people that pay that much per month.
Title: Re: talk of reducing the mortgage deduction
Post by: Smurf Hunter on September 07, 2017, 11:33:11 AM
I pay about $275 per year to park for work, which seems like a lot to me until I talk to people that pay that much per month.

I think the monthly rate is just around $200, but that's half a car payment for a nice car.

I'm not a serious gear head, but I generally like cars and appreciate nice ones.  I cannot understand people who pay $50K for a beautiful car, and put 20K miles annually sitting in traffic then pay $200+ per month to park it.
It's a total waste.

Near my office is a building with a valet out front.  At the ground floor is a starbucks.  Some rich dude drove his Rolls to the starbuck and used the valet.
(https://imgur.com/Cq2kWv4.png)

If I had the means to afford a car like that, I'd take all my money and run somewhere far from the city and relax. What's even worse, are the high end performance cars.  If you can afford a $250K Ferrari and Aston Martin, you should not be at starbucks.  You should be fighting international terror, Dr. Evil, and have a super model in the front seat while you drive 100mph+ through a gorgeous landscape.  It makes me a little sad...
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on September 07, 2017, 12:12:02 PM
If you can afford a $250K Ferrari and Aston Martin, you should not be at starbucks.  You should be fighting international terror, Dr. Evil, and have a super model in the front seat while you drive 100mph+ through a gorgeous landscape.  It makes me a little sad...

That's pretty much what I wold do with it, but I'd like to have a chance to really find out for sure...
Title: Re: talk of reducing the mortgage deduction
Post by: David in MN on September 07, 2017, 12:44:29 PM
Don't fall for the assumption that a guy driving the car can afford it. If you track what auto loans have done in the past decade, you'll find increasingly cars are being traded in WITH debt that gets rolled into the next car's loan. Car loans also extend out as far as 8 years that I have seen.

There are a lot of misguided people who fill up downtown and suburbia interested in McMansions and the latest Iphone. Cars are a similar phenomenon. We allknow someone who lost a year or more of retirement to a "fun" car. How many people do you know who have more cars than family members, a boat, jet skis, snowmobiles, etc?

Living within your means isn't the most fun and it certainly doesn't look glamorous from the outside. To tie it back to property, all the new houses by me are 3 stories on 1/8 of an acre. That's not enough to let the kids run around on. And all my friends who buy them have "extra rooms". The current trend is strange to me.
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on September 07, 2017, 01:05:51 PM
Don't fall for the assumption that a guy driving the car can afford it. If you track what auto loans have done in the past decade, you'll find increasingly cars are being traded in WITH debt that gets rolled into the next car's loan. Car loans also extend out as far as 8 years that I have seen.

There are a lot of misguided people who fill up downtown and suburbia interested in McMansions and the latest Iphone. Cars are a similar phenomenon. We allknow someone who lost a year or more of retirement to a "fun" car. How many people do you know who have more cars than family members, a boat, jet skis, snowmobiles, etc?

Living within your means isn't the most fun and it certainly doesn't look glamorous from the outside. To tie it back to property, all the new houses by me are 3 stories on 1/8 of an acre. That's not enough to let the kids run around on. And all my friends who buy them have "extra rooms". The current trend is strange to me.

Yep.  Or they lease them and have auto debt every single year of their adult lives, never having a paid off vehicle.

My ex was the "keeping up with the Joneses" type, only most of his friends were millionaires.  We made good money (his income was about $125k when I left him 14 years ago) but we were always living paycheck to paycheck because he had to have the bigger truck, the bigger motorhome, and everything that his friends had.  It sucks.  "Stuff" does not make you happy when you feel like one layoff and a few months of unemployment will make you homeless.
Title: Re: talk of reducing the mortgage deduction
Post by: osubuckeye4 on September 07, 2017, 03:04:08 PM
Don't fall for the assumption that a guy driving the car can afford it. If you track what auto loans have done in the past decade, you'll find increasingly cars are being traded in WITH debt that gets rolled into the next car's loan. Car loans also extend out as far as 8 years that I have seen.

There are a lot of misguided people who fill up downtown and suburbia interested in McMansions and the latest Iphone. Cars are a similar phenomenon. We allknow someone who lost a year or more of retirement to a "fun" car. How many people do you know who have more cars than family members, a boat, jet skis, snowmobiles, etc?

Living within your means isn't the most fun and it certainly doesn't look glamorous from the outside. To tie it back to property, all the new houses by me are 3 stories on 1/8 of an acre. That's not enough to let the kids run around on. And all my friends who buy them have "extra rooms". The current trend is strange to me.

Auto loans are getting insane.

I have friends who are on 8 year plans with over $300/mo payments, and they are driving middle of the road cars. It's because they keep going back every 18-24 months and rolling their previously unpaid for car into a new car.

Sure, you got your 2017 car for $28,000 and that was a steal... but, you rolled in $19,000 that you hadn't paid off of your 2016 car, and you're extending it out 8 years at 3-5% interest. Instead of financing $25,000 after your down payment, you're closer to $47,500. Sure, your monthly payments stay the same, but you're rooted to them for almost a decade....


It's one of many bubbles forming around debt... wages stay the same, prices for goods increase... in order to meet demand, creditors are extending debt out further and further.

This is all going to end very poorly.
Title: Re: talk of reducing the mortgage deduction
Post by: Carl on September 07, 2017, 03:10:33 PM
  Soon,the bubble will burst.
Title: Re: talk of reducing the mortgage deduction
Post by: RitaRose1945 on September 07, 2017, 03:31:52 PM
I have friends who are on 8 year plans with over $300/mo payments, and they are driving middle of the road cars. It's because they keep going back every 18-24 months and rolling their previously unpaid for car into a new car.

Sure, you got your 2017 car for $28,000 and that was a steal... but, you rolled in $19,000 that you hadn't paid off of your 2016 car, and you're extending it out 8 years at 3-5% interest. Instead of financing $25,000 after your down payment, you're closer to $47,500. Sure, your monthly payments stay the same, but you're rooted to them for almost a decade....

I bought a 3-year-old lease return with well documented maintenance, and had Jay (gearhead) look it over first.  I got a 5 year loan, then paid it off after 3 years when I got laid off and had a tiny pension I could cash out.  It would have paid me literally $100 per month in 2035 dollars if I had left it there.   ::)

I chose that one because it had about 30,000 miles, and it's a Honda, so I know it will go at least another 150,000 more, even with city driving.  I knew I probably wouldn't have to buy another one anytime soon.  If I can have a reliable car with no monthly payment for 15 years or more, that's pretty darn close to heaven for me.
Title: Re: talk of reducing the mortgage deduction
Post by: David in MN on September 07, 2017, 03:33:32 PM
I'll start a thread dedicated to autos...
Title: Re: talk of reducing the mortgage deduction
Post by: mountainmoma on September 16, 2017, 10:41:05 AM
Even the small towns here, under pressure from the State government, and local pressure, will build overly tall ( for their historic norms) if and when it is in an area that even somewhat makes sense, like this project in a "downtown" area of a town of 50,000 people. There realy is alot of pressure to approve housing. This is being built on an empty lot that was commercial, destroyed in the Loma Prieta earthquake quite a number of years ago. The rest of the street has been rebuilt, this is the last lot. So, it has to include housing, and their are many dense housing areas on this street, mixed use. This will be the tallest, by far.

The thing is, this realy doesn't make affordable housing, as I mentioned, with land prices as high as they are, you can build it here, but it is still expensive ! So, 79 unit apartment building in a town of 50,000. Want to guess the projected rents ? $2000 for a studio apartment, $2500-3000 for a one bedroom, and $3,700 for a two bedroom -- Apartment. Even when we can build -- it is NOT affordable ! Supply and demand, land prices when there is no more room. This is a town of 50,000 with a 1 hour commute to San Jose, longer to other areas of Silicon Valley. Maybe they think the new Google complex in downtown San Jose will have some high paid young folks who want to live closer to surfing that are going to rent these ?

Quote
“We are ready to invest $35 million into this project, with $2 (million) of those $35 million going to city fees,” Swenson project manager Scott Connelly said. “We have selected our construction lender for a 79-unit project, so hopefully we can get there tonight. We expect to have our loan closed by the end of October. So, this is now real, that we can get a shovel in the ground and intend to do it as expeditiously as possible.”

The development, including underground parking, was approved to increase from 63 to 79 residential units by converting units planned as two-bedroom into studio and one-bedroom units. The final tally includes 16 studio, 43 one-bedroom and 20 two-bedroom units. Exterior balconies decks also would be added. The units are expected to be marketed as apartments initially, with construction beginning as early as November. Once the first unit is sold as a condominium and existing rental leases subsequently expire, 12 of the units will be required to be sold at a federally established affordable rate, up from the original 10-unit proposal.

Connelly said it is too early to say what the units’ monthly rent will be set at. Based on current market conditions, however, he estimated the studios could be set at “plus or minus” $2,000 a month; the one-bedrooms at $2,500 to $3,000 and the two-bedrooms at about $3,700, with some higher-end units.

http://www.santacruzsentinel.com/government-and-politics/20170912/major-downtown-santa-cruz-housing-project-nearly-shovel-ready-with-unit-downsizing?source=most_viewed