Author Topic: talk of reducing the mortgage deduction  (Read 19757 times)

Offline iam4liberty

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Re: talk of reducing the mortgage deduction
« Reply #90 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

Imagine if all journalism was this clear!

Offline mountainmoma

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Re: talk of reducing the mortgage deduction
« Reply #91 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....
   

Offline iam4liberty

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Re: talk of reducing the mortgage deduction
« Reply #92 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.

Offline mountainmoma

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Re: talk of reducing the mortgage deduction
« Reply #93 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.

Offline iam4liberty

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Re: talk of reducing the mortgage deduction
« Reply #94 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

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.
« Last Edit: September 05, 2017, 11:33:16 PM by iam4liberty »

Offline mountainmoma

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Re: talk of reducing the mortgage deduction
« Reply #95 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...

Offline Carl

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Re: talk of reducing the mortgage deduction
« Reply #96 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?

Offline mountainmoma

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Re: talk of reducing the mortgage deduction
« Reply #97 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 ?

Offline Carl

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Re: talk of reducing the mortgage deduction
« Reply #98 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.

Offline mountainmoma

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Re: talk of reducing the mortgage deduction
« Reply #99 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

Offline Carl

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Re: talk of reducing the mortgage deduction
« Reply #100 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?

Offline Morning Sunshine

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Re: talk of reducing the mortgage deduction
« Reply #101 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.


Offline Carl

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Re: talk of reducing the mortgage deduction
« Reply #102 on: September 06, 2017, 06:37:38 PM »
  We are a product of our environment .

Offline RitaRose1945

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Re: talk of reducing the mortgage deduction
« Reply #103 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.

Offline David in MN

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Re: talk of reducing the mortgage deduction
« Reply #104 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.

Offline Stwood

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Re: talk of reducing the mortgage deduction
« Reply #105 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.

Offline David in MN

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Re: talk of reducing the mortgage deduction
« Reply #106 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.

Offline Smurf Hunter

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Re: talk of reducing the mortgage deduction
« Reply #107 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.

Offline RitaRose1945

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Re: talk of reducing the mortgage deduction
« Reply #108 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.

Offline Smurf Hunter

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Re: talk of reducing the mortgage deduction
« Reply #109 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.


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...

Offline RitaRose1945

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Re: talk of reducing the mortgage deduction
« Reply #110 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...

Offline David in MN

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Re: talk of reducing the mortgage deduction
« Reply #111 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.

Offline RitaRose1945

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Re: talk of reducing the mortgage deduction
« Reply #112 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.

osubuckeye4

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Re: talk of reducing the mortgage deduction
« Reply #113 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.

Offline Carl

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Re: talk of reducing the mortgage deduction
« Reply #114 on: September 07, 2017, 03:10:33 PM »
  Soon,the bubble will burst.

Offline RitaRose1945

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Re: talk of reducing the mortgage deduction
« Reply #115 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.

Offline David in MN

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Re: talk of reducing the mortgage deduction
« Reply #116 on: September 07, 2017, 03:33:32 PM »
I'll start a thread dedicated to autos...

Offline mountainmoma

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Re: talk of reducing the mortgage deduction
« Reply #117 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