Real Estate Crash thread

[Kevo]

Regardless, the story here is declining wages + lack of job growth = fucked long term housing market. The SFR builders know this and are being cautious in their approach so far. There are still lots of deals to be had for people with a long term ownership window, just not in San Diego.

With all the private equity buying going on, the stage is set to turn the millenials into a generation of perpetual renters.

Its a generation that is fucked with student loan debt and the worst job market since the great depression. Wages are lower and debt to income is higher than previous generations. There are so many people in this age group who will never qualify for a mortgage, and now with the PE land grab everything is in place for those that own the housing to rent it out forever.

This might well fuck over the boomers though, since the "house as retirement" model is going to fail when so few individuals if the younger generations are buying houses.

The cycle doubles back on itself when said boomers can't retire since they can't cash out the house and the millenials can't buy houses since they don't have gainful employment because the boomers won't retire.

[mud]

^^^ population growth and immigration are two items missing from that theory.
Hell, we need to create 100K jobs each month just to keep up with US population growth.

[Benny Profane]

The cycle doubles back on itself when said boomers can't retire since they can't cash out the house

Yeah, but, how does that work? I mean, you have to live somewhere, right? OK, they sell the house. Now what? Where do they go? Nobody is moving to Florida. That market is fucked for decades, it seems, even though, yeah, that would be a wise financial move from, say, DC or NY metro or Boston. You can buy three times the house in Florida, right? But, still, at that extreme tradedown in price, you're still talking about 30-40% of that supposed liquidity locked up in a house again, along with those expenses, especially hurricane insurance. But, again, the Boomers aren't doing it. Maybe everybody in mired in their HELOCs? Florida is only bouncing back in Miami, and that's international money.
So, then what? Reverse mortgage. Man, that's like handing your life to a pawn shop market. What else? I guess most older people, like most older people I've watched in my life, just stay put unless they get kicked out. How do you spend that?

[mud]

Benny your ignorance is outstanding, no wonder you hate everyone who is successful.

[Kevo]

Yeah, but, how does that work? I mean, you have to live somewhere, right? OK, they sell the house. Now what? Where do they go? Nobody is moving to Florida. That market is fucked for decades, it seems, even though, yeah, that would be a wise financial move from, say, DC or NY metro or Boston. You can buy three times the house in Florida, right? But, still, at that extreme tradedown in price, you're still talking about 30-40% of that supposed liquidity locked up in a house again, along with those expenses, especially hurricane insurance. But, again, the Boomers aren't doing it. Maybe everybody in mired in their HELOCs? Florida is only bouncing back in Miami, and that's international money.
So, then what? Reverse mortgage. Man, that's like handing your life to a pawn shop market. What else? I guess most older people, like most older people I've watched in my life, just stay put unless they get kicked out. How do you spend that?

The vast majority of the retired boomers that I know downsized their homes when they retired. They didn't move to Florida, but they did sell their homes and buy something 1/3 or 1/2 the price in the same geographic area.

[Benny Profane]

The vast majority of the retired boomers that I know downsized their homes when they retired. They didn't move to Florida, but they did sell their homes and buy something 1/3 or 1/2 the price in the same geographic area.

OK, so, they may have liquified only 30% of the equity in the old home, if it was 100% off mortgage. But many homes aren't. Anyway, what's 30% of equity in most homes? You can't live on that.

Property taxes are a big problem. Around here, they are approaching and beyond average Social Security checks.

[Benny Profane]

Benny your ignorance is outstanding, no wonder you hate everyone who is successful.

I missed this. How, exactly am I ignorant here? Seriously. Just wondering. Help me see it the right way.

[mud]

Sorry that was a bit rude, but seriously saying the FL market is fucked for decades shows no understanding of the current market where things are turning around and not just in Miami. Saying reverse mortgages is like going to a pawn shop belittles a finically choice many boomers are going to need as grow older. It's not for everyone but is a life saver for those that have no way of earning income and need to put food on the table.

[Benny Profane]

Sorry, but Florida is fucked for a long time, and, the killer is, it should be churning like mad right now, with 10,000 Boomers turning 65 every day. Sure, there's some Canadians and the cash rich and hedge funds buying in bulk, but, the natural market just isn't happening. The underwater figures in all of the cities are still horribly bad. Check out Zillow. Just punch in any city and surrounding area, and behold a sea of red dots.
And you sort of support my argument. Reverse mortgages are an act of desperation, much like bringing the family jewels down to the pawn shop.

[mud]

Zillow is your fact checker? Ha! Zillow is considered a joke by industry standards.

I close 75 loans a month in FL and all of the appraisals are coming in 10 to 15% higher than Zillow in the past six months. Your ignorance really is impressive when talking business you don't understand. Thanks for the laughs.

[Benny Profane]

Oh, now I know why you're so cranky. You're in the Florida mortgage market.

Zillow is just a first stop, just to illustrate. I can only imagine the hidden carnage that Zillow doesn't even show.

10-15% higher than what? So, I can pick up a two bedroom condo for 45,000 instead of 40? Cool.

[mud]

Average about 250 loans a month nationally. Your reading compression is only matched by your wit. Carry on.

[Danno]

mud, welcome to Padded Room real estate thread. Let me introduce you to benny.

[Hugh Conway]

Zillow is your fact checker? Ha! Zillow is considered a joke by industry standards.

Dirt Pimps have standards?l

[mud]

mud, welcome to Padded Room real estate thread. Let me introduce you to benny.

Strawberry Fields Foorreevvverrrr

[cramer]

The vast majority of the retired boomers that I know downsized their homes when they retired. They didn't move to Florida, but they did sell their homes and buy something 1/3 or 1/2 the price in the same geographic area.

Forgive my ignorance, but in CA you can't do that can you? They have capital gains tax. Well i guess you can do it, but you're throwing away a serious amount of money. Or am i misinformed? My understanding is if i sell my house here, i have to buy something of equal value or invest that money in something or they tax the money i made. I'm pretty sure im right on this. My buddy made a half mil when he sold his house at the height of the last boom. He had like some insane amount of time, like 30 days or some shit to have that money invested. He ended up franchising a frigging subway. Payiing 800K for a house wasnt an option.

[RootSkier]

No. This is half the reason for the real estate bubble: if you've lived in a place as your primary residence for two of the last five years, you can sell it and pay no capital gains up to $250,000; or $500,000 if both you and your spouse satisfy the residence requirement. You can do it every two years.

http://www.law.cornell.edu/uscode/text/26/121

[cramer]

No. This is half the reason for the real estate bubble: if you've lived in a place as your primary residence for two of the last five years, you can sell it and pay no capital gains up to $250,000; or $500,000 if both you and your spouse satisfy the residence requirement. You can do it every two years.

http://www.law.cornell.edu/uscode/text/26/121

So my buddy must have made over 250K im assuming. Or he wasnt there for 2 of the last 5 years. He's not a good friend, more of an ex co-worker. Thanks for the info. I was misinformed. But i think most who told me about capital gains probably made well over 250K. My uncle made about 330K on his condo. Which is another who was single and sold at the height of the boom. Makes more sense to me now for the great california migration to washington state back in the beginning of 90's. They sold their shit, made 245K and paid cash for land and big ass houses.

[4matic]

Cramer, are you talking about a 1031 exchange on investment property. Only a short term flip would generate that kind of tax.

[cramer]

Cramer, are you talking about a 1031 exchange on investment property. Only a short term flip would generate that kind of tax.

No, im talking about if i bought my house for 223K, sold it for 724K im subject to capital gains tax. Which, in my case, its not going to happen. I hadn't heard about the 250/500K exemption. Mainly because everyone i know that got hit by capital gains made over the quarter million dollars down here when they sold and were single. So im cool. I wasnt looking to sell or anything, i just didnt realize i could sell this place at say 150K equity/profit and bounce to the coast or something and call her a day. I thought the irs could come after me for like 30-40% of that. http://money.howstuffworks.com/perso...gains-tax1.htm

as stated before, forgive my ignorance. This really more impacted the people who had bought back in the day for 150K, house sold for 700K, etc. I dont think we'll see that again, at least not in my lifetime. But the reality is I am in the bay area but bought as a couple. So no way we make 500K on this house. But had i bought alone, 250K isnt much of a stretch after 10 years. We all know how this market goes every decade. Its original sale price was 380K. So for it to sell for 450K 10 years from now, i wouldnt be suprised. Either way, im not selling the sucka. I'd rent it out and keep it in the fam.

[RootSkier]

Dude, even if you made $350k as a single person, you only pay capital gains on $100k. Can't really complain.

[mcsquared]

Dude, even if you made $350k as a single person, you only pay capital gains on $100k. Can't really complain.

And it would be taxed as long term cap gains as well. So $15k plus any state taxes. Every. two. years. You can even live there for two years, rent for another 3 and still get the exemption. Surprised cramer didn't learn this from Zillow.

[Benny Profane]

Well, there's a sign that the market is bubbling back up again, when the talk turns to capital gains tax avoidance.

[4matic]

And it would be taxed as long term cap gains as well. So $15k plus any state taxes. Every. two. years. You can even live there for two years, rent for another 3 and still get the exemption. Surprised cramer didn't learn this from Zillow.

Married filing jointly with adjusted income below $72.5k pays zero capital gains tax. It's $36k income limit for a single person.

[liv2ski]

^^^Best to avoid those pesky taxes. In my case, we have lived in a home for 25 years that went from $200k to $1M. Down the road I think the plan is to rent the home out for 2 years, so it is considered an investment property, sell and roll all the proceeds into apartments or what ever will give me the best ROI without paying taxes until I be dead.