My daughter is a 25 year old engineer working in Iowa. She is single. so just needs a starter home, but there's nothing like that available. Either 4/3's or total fixer upper's that she doesn't have time or skill for. We are investigating the possibility of buying a lot, digging the basement, and having utilities run and putting a manufactured 3/2 on the foundation. I think we can do this for about $125/sq ft, so a 2200 sq ft 3/2 (quite spacious for a single gal) would be $275K plus the cost of the lot. If the lot is $25,000 and that's also her down payment, then her note is just under $2K/month plus insurance and taxes. That would still consume 40% of her take-home pay. Her 2 bedroom apartment is quite nice and is $1200/mo. so she's staying there for now...
When I bought my first house, my monthly house payment was $176 a month and my taxes were about $30 per month. In my current house, which I own outright, my taxes are more than double my house payments in my first house at more than $300. Approximately the same square footage except the current house is over a basement. Same part of the same county and state-Athens GA. There are at least two problems in play here, one is the corrosive growth of government in our state and country, and second is the continuous devaluation of our currency through inflation. The only solution I can see is a return to constitutional currency (money), which is gold and silver.
First, I would love to see Iguazu Falls. In fact, I've been looking at pictures of them all this week. As far as buying a home goes, I feel badly for the younger generation. I moved to the Arkansas Ozarks several years ago, paid cash for a nice affordable property and have a cap on my also affordable property tax. But my son feels that homeownership is beyond his reach. As far as property taxes go, they should be illegal. A one time sales tax maybe. But no government should have the right to take your home away from you due to property taxes.
You will pay your property taxes or we will take your house. Your house is collateral for our school districts bonds and investors say they want paid. I am told the bill is somewhere north of 5 trillion dollars nationwide. I wonder how quick people would be to vote in another school bond issue if they realized their house is the collateral? You have to wonder if people will ever wake up?
Abstract on our property goes back to Lincoln presidency. Contact for Deed or bank interest rates were 7-7.5% until mid 70s (when I bought). I paid up to 16% interest rates.
The Fed ramped up printing fake money and super low interest rates- that’s the biggest reason for this inflation of home values.
This an often overlooked perspective. My first house in'85 had a 12-3/4% rate, and I was happy to get that rate as they were just coming down from the 16's. But my wages were miniscule in those days, so what's the other difference to today? I want spending $300/mo on TV and internet, I didn't continue to pay for and upgrade every new phone or tech that comes out, I bought a sensible within- my- means vehicle and then kept it 17 years.
It all comes down to personal choices, money management, and responsibility.
Mr Gordon hits my worst fear of the several he mentioned: those insidious property taxes; which are neither gradual nor avoidable. We recently contacted our local representative about recent hikes. She offhandedly stated, “my prop taxes are going up too.” I didn’t say this, but I thought, “you represent whom?”
Yeah, here in FL, property taxes have been increasing by 10-40% with no increase in services provided. In fact several public schools in most major cities are being closed due to lack of enrollment. Apparently they built too many, and overspent on that too.
There is a homestead tax deduction increase bill on the ballot in November to reduce primary homestead property taxes. The tax deduction will not apply to school taxes, and I don't expect school taxes to go down even though they are closing several schools.
That ballot bill needs 60% of the vote to pass, and even though most homestead property owners will vote for it, there are actually some people opposed to it. Such as government employees and anyone else receiving tax money.
Governor DeSantis is right when he says no one really ever owns any home when it has property taxes on it. It is rent paid to the government, and you lose it if taxes are not paid.
I think the whole idea of home "ownership" in the US is a total farce. You never really own your home. Just fail to pay your property taxes and see what happens. The government may confiscate your property and compensate you zero. And raising your property tax based on ever increasing assessed value of your property is just taxing you on unrealized capital gains. And regardless of how long it's been since you paid off your mortgage or how old you get, property taxes never cease. The entire scheme just seems criminal and unethical..
What if building McMansions is actually the answer? Instead of people buying up starter homes and renovating them into McMansions, just build more McMansions in the first place and leave the starter homes for the rest of us!
Another reason why people should read my critically acclaimed book “Quantum of Justice - The Fraud of Foreclosure and the Illegal Securitization of Notes by Wall Street”. It is the true story of my lawsuit against Wells Fargo Bank for Fraud. What I uncovered will simply blow your mind wide open. Learn what the courts tried to silence by removing all of the four years of litigation documents from public view.
Vancouver,BC homes went ballistic. If it had a gate, grass, parking space it was worth $2M. Regardless of age, size, repairs, taxes, energy costs. All of it made possible on "free money". Yes I believe they could take it higher but I m certain a loaf of bread will mirror the Weimer opening.
I'm Vancouver born & raised... I sold my townhouse and used the 15 years of equity to buy rental properties away from the city... a combination of luck and listening to the right people..the city is a natural wonder, however it is expensive & overrated...
I live in Australia and just have some observations.
Whilst I concede negative gearing has some impact on buying activity, it is far from the main reason for house price rises. Negative gearing is losing money, even with the reduced tax liability. If you run a business and lose money you get a tax deduction. Why is housing treated any different?
Also, you have to look at the total cycle of owning an investment property and the total taxes paid. I had an investment property from 1998 to 2010 (Perth) and the annualised net return was 5.7% including capital gains (which was the only gain in 12 years of ownership) and I paid tax on that at the sale.
5.7% per annum is not terrible, but certainly not the outsized claims many would have you believe, considering the official inflation rate during that period was at least half of that, so real gains more like ~3%pa.
The number one problem with housing price is inflation. Inflation is a government tax (theft) and is a pure currency debasement (what is called counterfeiting if done by a private person, but stimulus when done by the government). Without this there is no reason for house prices to rise (or all prices in general for that matter). As a lot of people have pointed out, there is no use in house price increases for people living in the same house as it just increases all the costs of ownership. The value has not changed - it's the same house - only the price in the debased currency has changed.
People often ask for wage increase as per the official CPI (and we all know how accurate that is), but unless they get a wage increase to cover the tax increase as well, they're worse off. If your wages aren't going up by at least the same percentage as costs, plus the tax percentage on those wages, you're going backwards.
Who remembers buying a house when the peanut farmer was president? Mortgage rates hit 16%+. People still did it.
What’s different now is the $39–40 trillion in debt our elected officials have piled on since then. We complain about 7% rates and high prices, but we keep voting for the same fiscal habits that created this mess.
Don’t worry though — we have commies to vote for now. That should work out great!
I moved to Ecuador from Canada in 2008. I still work full-time, and have a good life here. I couldn't afford to live in Canada now on what I earn. For anyone who can work from anywhere, go somewhere cheaper, where what you earn will give you a life you can enjoy.
The article by and large has many strong similarities to Australia.
The process known here as ‘ negative gearing’ has been changed by Government or somewhat repealed.
Negative gearing is the process of buying investment properties by having losses manifesting as a loss ( by mortgage or support) against your income as the difference between servicing investment costs (losses) on the investment.
That is - your salary and tax liability.
This caused lower band property ( first home buyers) suffer very large purchase price increases as their buy markets became influenced by the Nations tax rates and the formula for deductibility on tax by investors with multiple properties.
I am ‘ slightly to the right of Ghengis Khan’ but he process to me stank. It got out of control. In my view - correction in price has started but will snow ball. A correction was coming anyway but the changes in tax law have accelerated it. Regards to all.
Negative gearing in Australia was outlawed one before, in the early 1980s if I recall correctly. The result was a big reduction in the construction of new housing as investors left the housing market, and developers could not get finance to start new projects. After 2-3 years negative gearing was restored. I expect the same result this time.
Joel and Mr. Gordon, In the 1950's,through the 60's and into the 1970's we had a government program that built 1,000's of 1st home buyer's 3 bedroom ranch homes. It was 5% down and the government guaranteed the additional 15% downpayment , and people got a mortgage at the local savings and loan bank but they had to have a job to pay the mortgage. But they could build equity in their home, add onto or sell it and buy a bigger home (or use their equity to start a small business. Than the politicians scrapped the program along with the allowing Savings Banks to make commercial loans ( of which they knew nothing about) and lots of them failed( in the 1980's). In the early 2,000's the federal reserve kept the interest rates low to help the federal government pay off it's debt, which it did not do, they just added more debt.Previuosly interest rates and house prices were relative to a person's monthly wages.(if interest rates went up house prices came down and vise versa) Not anymore. Our federal and state governments have no common sense and no business sense. I've commented before, neither one could run just one profitable lemoneade stand even if you finianced it 150% and guaranteed the customer base. It would appear to have the characteristics of and another government conspiracy against the working and retired classes of Americans today.
The low interest rate environment was a product of the Obama administration in response to the housing collapse, so it's also important to note that the young folks have only been in an artificially low rate market (until they started moving in 2022). That being said, there is another issue lurking in the affordability equation and I'm not hearing enough about it. I'm a 26 year Realtor and have always kept buyers focused on the payment. However, PITI doesn't factor in utilities. Taxes are rising quickly, insurance is the same-and now utilities are causing people to make changes. It's the data centers, the crumbling infrastructure, the foolish investments in solar and wind which are costs borne by the end user. Here in my part of NC, there are posts on NextDoor daily speaking to 200-300% increases in power bills. That can't be absorbed for many households.
And to the commentor who wisely noted the cost of school bonds and the property owners who are the collateral-these bond packages are promoted and passed out of good intention while the US stays below replacement rate and families are homeschooling at an increasing rate. Are we spending money for today's narrative, failing to check the math against a 10 year projection?
Throwing good money after bad-the story of taxes in totality.
Why? What set into motion the rapid increase in house prices? Here in the UK we experienced the same effect three decades ago. So what drove that increase? It remains my belief that it was all driven by the need to increase tax income for a government deep in debt, needing to repay their borrowing, with their only income being tax income. Food for thought?
My daughter is a 25 year old engineer working in Iowa. She is single. so just needs a starter home, but there's nothing like that available. Either 4/3's or total fixer upper's that she doesn't have time or skill for. We are investigating the possibility of buying a lot, digging the basement, and having utilities run and putting a manufactured 3/2 on the foundation. I think we can do this for about $125/sq ft, so a 2200 sq ft 3/2 (quite spacious for a single gal) would be $275K plus the cost of the lot. If the lot is $25,000 and that's also her down payment, then her note is just under $2K/month plus insurance and taxes. That would still consume 40% of her take-home pay. Her 2 bedroom apartment is quite nice and is $1200/mo. so she's staying there for now...
When I bought my first house, my monthly house payment was $176 a month and my taxes were about $30 per month. In my current house, which I own outright, my taxes are more than double my house payments in my first house at more than $300. Approximately the same square footage except the current house is over a basement. Same part of the same county and state-Athens GA. There are at least two problems in play here, one is the corrosive growth of government in our state and country, and second is the continuous devaluation of our currency through inflation. The only solution I can see is a return to constitutional currency (money), which is gold and silver.
Great update Joel!
First, I would love to see Iguazu Falls. In fact, I've been looking at pictures of them all this week. As far as buying a home goes, I feel badly for the younger generation. I moved to the Arkansas Ozarks several years ago, paid cash for a nice affordable property and have a cap on my also affordable property tax. But my son feels that homeownership is beyond his reach. As far as property taxes go, they should be illegal. A one time sales tax maybe. But no government should have the right to take your home away from you due to property taxes.
You will pay your property taxes or we will take your house. Your house is collateral for our school districts bonds and investors say they want paid. I am told the bill is somewhere north of 5 trillion dollars nationwide. I wonder how quick people would be to vote in another school bond issue if they realized their house is the collateral? You have to wonder if people will ever wake up?
Abstract on our property goes back to Lincoln presidency. Contact for Deed or bank interest rates were 7-7.5% until mid 70s (when I bought). I paid up to 16% interest rates.
The Fed ramped up printing fake money and super low interest rates- that’s the biggest reason for this inflation of home values.
This an often overlooked perspective. My first house in'85 had a 12-3/4% rate, and I was happy to get that rate as they were just coming down from the 16's. But my wages were miniscule in those days, so what's the other difference to today? I want spending $300/mo on TV and internet, I didn't continue to pay for and upgrade every new phone or tech that comes out, I bought a sensible within- my- means vehicle and then kept it 17 years.
It all comes down to personal choices, money management, and responsibility.
Mr Gordon hits my worst fear of the several he mentioned: those insidious property taxes; which are neither gradual nor avoidable. We recently contacted our local representative about recent hikes. She offhandedly stated, “my prop taxes are going up too.” I didn’t say this, but I thought, “you represent whom?”
Yeah, here in FL, property taxes have been increasing by 10-40% with no increase in services provided. In fact several public schools in most major cities are being closed due to lack of enrollment. Apparently they built too many, and overspent on that too.
There is a homestead tax deduction increase bill on the ballot in November to reduce primary homestead property taxes. The tax deduction will not apply to school taxes, and I don't expect school taxes to go down even though they are closing several schools.
That ballot bill needs 60% of the vote to pass, and even though most homestead property owners will vote for it, there are actually some people opposed to it. Such as government employees and anyone else receiving tax money.
Governor DeSantis is right when he says no one really ever owns any home when it has property taxes on it. It is rent paid to the government, and you lose it if taxes are not paid.
I think the whole idea of home "ownership" in the US is a total farce. You never really own your home. Just fail to pay your property taxes and see what happens. The government may confiscate your property and compensate you zero. And raising your property tax based on ever increasing assessed value of your property is just taxing you on unrealized capital gains. And regardless of how long it's been since you paid off your mortgage or how old you get, property taxes never cease. The entire scheme just seems criminal and unethical..
What if building McMansions is actually the answer? Instead of people buying up starter homes and renovating them into McMansions, just build more McMansions in the first place and leave the starter homes for the rest of us!
Another reason why people should read my critically acclaimed book “Quantum of Justice - The Fraud of Foreclosure and the Illegal Securitization of Notes by Wall Street”. It is the true story of my lawsuit against Wells Fargo Bank for Fraud. What I uncovered will simply blow your mind wide open. Learn what the courts tried to silence by removing all of the four years of litigation documents from public view.
https://shop.ingramspark.com/b/084?params=rSQlhTUPAGPZF4jSKhFoTs1OefrSlm1uBnv4uSuuyHH
Vancouver,BC homes went ballistic. If it had a gate, grass, parking space it was worth $2M. Regardless of age, size, repairs, taxes, energy costs. All of it made possible on "free money". Yes I believe they could take it higher but I m certain a loaf of bread will mirror the Weimer opening.
I'm Vancouver born & raised... I sold my townhouse and used the 15 years of equity to buy rental properties away from the city... a combination of luck and listening to the right people..the city is a natural wonder, however it is expensive & overrated...
I live in Australia and just have some observations.
Whilst I concede negative gearing has some impact on buying activity, it is far from the main reason for house price rises. Negative gearing is losing money, even with the reduced tax liability. If you run a business and lose money you get a tax deduction. Why is housing treated any different?
Also, you have to look at the total cycle of owning an investment property and the total taxes paid. I had an investment property from 1998 to 2010 (Perth) and the annualised net return was 5.7% including capital gains (which was the only gain in 12 years of ownership) and I paid tax on that at the sale.
5.7% per annum is not terrible, but certainly not the outsized claims many would have you believe, considering the official inflation rate during that period was at least half of that, so real gains more like ~3%pa.
The number one problem with housing price is inflation. Inflation is a government tax (theft) and is a pure currency debasement (what is called counterfeiting if done by a private person, but stimulus when done by the government). Without this there is no reason for house prices to rise (or all prices in general for that matter). As a lot of people have pointed out, there is no use in house price increases for people living in the same house as it just increases all the costs of ownership. The value has not changed - it's the same house - only the price in the debased currency has changed.
People often ask for wage increase as per the official CPI (and we all know how accurate that is), but unless they get a wage increase to cover the tax increase as well, they're worse off. If your wages aren't going up by at least the same percentage as costs, plus the tax percentage on those wages, you're going backwards.
Regards, Wayne
Who remembers buying a house when the peanut farmer was president? Mortgage rates hit 16%+. People still did it.
What’s different now is the $39–40 trillion in debt our elected officials have piled on since then. We complain about 7% rates and high prices, but we keep voting for the same fiscal habits that created this mess.
Don’t worry though — we have commies to vote for now. That should work out great!
I moved to Ecuador from Canada in 2008. I still work full-time, and have a good life here. I couldn't afford to live in Canada now on what I earn. For anyone who can work from anywhere, go somewhere cheaper, where what you earn will give you a life you can enjoy.
Thank You All.
The article by and large has many strong similarities to Australia.
The process known here as ‘ negative gearing’ has been changed by Government or somewhat repealed.
Negative gearing is the process of buying investment properties by having losses manifesting as a loss ( by mortgage or support) against your income as the difference between servicing investment costs (losses) on the investment.
That is - your salary and tax liability.
This caused lower band property ( first home buyers) suffer very large purchase price increases as their buy markets became influenced by the Nations tax rates and the formula for deductibility on tax by investors with multiple properties.
I am ‘ slightly to the right of Ghengis Khan’ but he process to me stank. It got out of control. In my view - correction in price has started but will snow ball. A correction was coming anyway but the changes in tax law have accelerated it. Regards to all.
Negative gearing in Australia was outlawed one before, in the early 1980s if I recall correctly. The result was a big reduction in the construction of new housing as investors left the housing market, and developers could not get finance to start new projects. After 2-3 years negative gearing was restored. I expect the same result this time.
Joel and Mr. Gordon, In the 1950's,through the 60's and into the 1970's we had a government program that built 1,000's of 1st home buyer's 3 bedroom ranch homes. It was 5% down and the government guaranteed the additional 15% downpayment , and people got a mortgage at the local savings and loan bank but they had to have a job to pay the mortgage. But they could build equity in their home, add onto or sell it and buy a bigger home (or use their equity to start a small business. Than the politicians scrapped the program along with the allowing Savings Banks to make commercial loans ( of which they knew nothing about) and lots of them failed( in the 1980's). In the early 2,000's the federal reserve kept the interest rates low to help the federal government pay off it's debt, which it did not do, they just added more debt.Previuosly interest rates and house prices were relative to a person's monthly wages.(if interest rates went up house prices came down and vise versa) Not anymore. Our federal and state governments have no common sense and no business sense. I've commented before, neither one could run just one profitable lemoneade stand even if you finianced it 150% and guaranteed the customer base. It would appear to have the characteristics of and another government conspiracy against the working and retired classes of Americans today.
The low interest rate environment was a product of the Obama administration in response to the housing collapse, so it's also important to note that the young folks have only been in an artificially low rate market (until they started moving in 2022). That being said, there is another issue lurking in the affordability equation and I'm not hearing enough about it. I'm a 26 year Realtor and have always kept buyers focused on the payment. However, PITI doesn't factor in utilities. Taxes are rising quickly, insurance is the same-and now utilities are causing people to make changes. It's the data centers, the crumbling infrastructure, the foolish investments in solar and wind which are costs borne by the end user. Here in my part of NC, there are posts on NextDoor daily speaking to 200-300% increases in power bills. That can't be absorbed for many households.
And to the commentor who wisely noted the cost of school bonds and the property owners who are the collateral-these bond packages are promoted and passed out of good intention while the US stays below replacement rate and families are homeschooling at an increasing rate. Are we spending money for today's narrative, failing to check the math against a 10 year projection?
Throwing good money after bad-the story of taxes in totality.
Why? What set into motion the rapid increase in house prices? Here in the UK we experienced the same effect three decades ago. So what drove that increase? It remains my belief that it was all driven by the need to increase tax income for a government deep in debt, needing to repay their borrowing, with their only income being tax income. Food for thought?