From the Philly Inquirer:
Is Philly’s housing market still hot? As buyers grow nervous and tired, home prices are slowing
Even before she and her husband started seriously house-hunting for their first home, Nicole Benson Paul had heard the stories of Philadelphia’s cutthroat real estate market.
There were reports of crazy bidding wars, as buyers sparred and scrapped for limited homes. Home prices seemed to be rising each month in most neighborhoods. At the start of this year, as the newlywed couple started to browse, listings that interested them flew off the market before they could even schedule a tour.
In the red-hot housing market that Philadelphia has been experiencing, it would have been no surprise — understandable, even — for Paul and her husband, Zach, to succumb to the trend that has captured thousands of city residents in the last few years: diving head-first into the market, voraciously bidding for properties, and overpaying or waiving contingencies to obtain a home when necessary.
Instead, the Pauls are part of what Philadelphia real estate agent Ashley Lauren Farnschlader calls the new “wait-and-see” buyers — a new category of house-hunters who are tired of searching, exhausted from bidding, and hesitant to go all-in on a house. Whether they are skeptical about where the market and economy are heading, recovering from buyer fatigue, or simply waiting to find the right home at the right price, many Philadelphia buyers are no longer clamoring for homes the same way they did in 2016 and 2017, local agents say.
“Buyers are buying smarter,” said Dylan Ostrow, an agent for Berkshire Hathaway HomeServices Fox & Roach in Center City, who helped the Pauls buy their first home in June. “I’ve told so many different clients … ‘We can wait for the right property. Something will come along priced correctly.’ ”
…
According to an analysis of the single-family housing market in the second quarter of 2018 — meaning April, May, and June — Philadelphia economist Kevin Gillen found that the increase in home values citywide significantly slowed for the first time in more than four years. Compared with the year before, home values in the 2018 spring season — typically the hottest market of the year — appreciated 0 percent, Gillen found, analyzing data provided by Houwzer and the city’s Recorder of Deeds.In other words: The typical Philadelphia home is worth no more today than it was one year ago
…
For a market that has experienced seemingly unstoppable jumps in home values since Philadelphia’s housing recovery began in 2012 — home values are now 19 percent higher than the city’s previous peak during the housing bubble in 2007 — the sudden plateau in values is a surprising and puzzling shift, especially as supply remains low and demand remains high. Notably, the number of homes on the market in the second quarter fell to an all-time low, with just 3,460 homes listed at the end of June — a phenomenon that should push prices up. At the same time, Gillen’s data show, the number of sales climbed to 6,460 in the three-month period, the highest in a decade.The unusual mismatch between buyer demand and home values has left economists and real estate agents with one big question: Is Philadelphia experiencing a momentary cooling, or could this be the start of a downturn?
Jobs jobs jobs jobs jobs jobs
Pay ….pay …pay
Agent Orange
Guess– 188,000
Actual- 157,000
UE- 3.9%
Average 224,000 last 3 months (upward revisions to May and June)
Giving up after 3 months?
From “Bogelheads Blog”…note Bergen County location/price point:
So we have had our house on the market for 3 months and unfortunately have not been able to sell it. Thus, we are now planning to rent it. It looks like our realtor has brought in a pretty good renter without actually having listed it for rent… Is there a standard compensation for this? In the contract for selling the house it says renting is “negotiable.”
Thank you.
Also, we live in Bergen County, NJ and our home is listed in the 800s. (not sure if this information is necessary but thought it may be…)
Guess just like 2006 …Where UE and home prices hit their bottom and peak respectively…
Home prices
2006 – Peak
2012- Bottom
2018- peak
So all downhill from here until 2024??
The SALT limitation is freaking people out……why is it such a mystery?
There will be a clear momentum once people see their 2018 tax returns…… then they will be deciding with a clear domain of facts.
Honesty, people need to appreciate that they won’t be caught in the AMT anymore. In many ways, the SALT limitation is a donkey and the stick.
Here is an exchange (from sale blog as before) about SALT:
“It would surprise me to learn that a majority of people (heck, even if it was 30% I’d be surprised) gave significant consideration to tax deductions when deciding how much house they could buy. I’m a CPA and I have never done that. ”
“That is astounding that a CPA would not evaluate the tax deductions.
I of course knew there was a mortgage interest deduction, but I never factored that into how much I was willing to pay for a house. My focus was only on the monthly payment. I never would have stretched what I was comfortable with because I knew I’d be getting a deduction.”
Too early…
Lemme know when you want to play chicken for pink slips, I’ll gladly take your car.
AMT matters for 5% of people in US. maybe more for East coast.
For someone making 200k ( 18K state income tax) with a 15K property tax, their out of pocket cost will go up by atleast by 5K next this year due to new SALT restrictions..
On top of that losing mortgage deduction as well…
Unemployment at 3.9%
2,000,000 fewer people on food stamps since Trump got elected
June revised up from 213,000 to 248,000 jobs
May revised up from 224,000 to 268,000 jobs
Wages up 2.7% from a year ago
More jobs than people to fill them
50% approval rating
Agree, AMT is big for East Coast, probably the only folks paying those high property tax AND high state income tax.
I reviewed my situation last year to see if I should prepay my property tax, after running actual numbers on tax software I found out I did not really have the property tax deduction for last 10 years as the AMT took that puppy away…
I still think the % of AMT households in Nj is less than 7%. Meaning, almost all of NJ will get screwed when SALT hits..
To be honest, I’m actually delaying buying a house because the rent vs owning doesn’t tilt towards owning anymore.. Financially doesn’t work out if the prices go sideways or of-course go down. Not saying I wont but this year but wait and watch until Jan-feb.
I’m in the market for a price range which is twice the median house price in my town. I think they are over valued and I can see them cooling off.. For the past 45 days .
So will see.
I’ve been saying the shit ain’t gonna hit the fan until tax season. That’s when we’ll learn how many supposedly wealthy people are living with little savings.
I’m ready to bite at this prices if it stays flat or +/- %. But I think we maybe in for something bigger.
As to AMT. Some pay a ton and others pay little. I always pay, but usually just a little.
NJ Dept,
Because of a very odd extended family circumstances. I have been sort of serial big one family renter. Here are my tips to for future serial big single family house renter.
The continual big issue, which was allude to here in the last few days is “deferred maintenance”. Generally the owners fall into accidental or smoking m3th fantasy of being a landlords or landlords where the check is paying for owner’s elderly care cost or their only source of income. Both don’t have the financial or social resources to be able to do proper maintenance.
An example of one, is an elderly distance landlord, I had to replace and finance one of the furnaces, and she reimburse me. To the credit card wise person, I charged it to a cash reward card and made my “fee” on it and paid it off in full with the next card bill.
The key is negotiating that initial lease/rent. You have a lot of landlords that have a fantasy price of their property. If you don’t negotiate well, because of the economics of single family rentals, “deferred maintenance” is guaranteed to happen and your tenancy is going to feel bad. It feels better, when your monthly hit is way smaller.
If you guys are right, I foresee a lot of financially desperate overnight accidental landlords and deals to be made.
NJDepartment says:
August 3, 2018 at 9:31 am
I still think the % of AMT households in Nj is less than 7%. Meaning, almost all of NJ will get screwed when SALT hits..
To be honest, I’m actually delaying buying a house because the rent vs owning doesn’t tilt towards owning anymore.. Financially doesn’t work out if the prices go sideways or of-course go down. Not saying I wont but this year but wait and watch until Jan-feb.
1987 Condo, Typically rental commission is 1 month rent paid by tenant.
I assume you realize the only reason your home did not sell is that it is over priced.
30….
Not my house, the blogger’s, but I assume you are right, and I guess the realtor felt it was better to grab some money via a rental rather than lower price??!!
Bad news for pumps, I hear he lives off the interstate.
Living by a busy road can dangerously alter your heart
https://www.thetimes.co.uk/article/living-by-a-busy-road-can-dangerously-alter-your-heart-3pc5rvph6
I don’t think Pumps lives off of a highway..
The extreme views from PUMP and EXPAT is toxic to this forum.. LOL
“To be honest, I’m actually delaying buying a house because the rent vs owning doesn’t tilt towards owning anymore.”
How firmly are you willing to commit long term to NJ? What portion of your income goes to supporting the state of NJ?
Look at the $150k-$500k earnings range where the income tax is only 6.4%.
Take your real estate tax bill. Using a little rule of thumb for a $300k earning family let’s put them in a $900k home with a 2% tax rate. That’s $18k or 6% of income.
Another percentage point for $3k of sales tax paid.
The State of NJ is taking 13.4% of your gross income. And that number will not be going down. Big commitment to lock yourself into long term.
leftwing,
I like NJ and wont move out unless I’m forced to.. I know it comes at a premium.
I’m a 225K/year single earner and my budget is 650K for a SFH and below 14K tax ideally.
Between Renting and owning, I’m losing in pure financial terms if I buy now.. That is due to hot prices and SALT issue. No question about that.
But I feel like I’m outbid by at-least 100-150K in the NY metro area.. So anything that fits my need is 750K plus which makes me think, what is cooking in here..
Also tax prop rate where I live is around 2.9..
Pura Vida baby.
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=9&cad=rja&uact=8&ved=2ahUKEwjq0KCdmNHcAhVG7YMKHbG2ADYQFjAIegQICRAC&url=http%3A%2F%2Fwww.who.int%2Fhealthsystems%2Ftopics%2Ffinancing%2Fhealthreport%2FCostaRicaNo11.pdf&usg=AOvVaw23wh_7T9evrZaErfMr0aYt
225K per year?
Rent and be finished. Get your wife to work. Then there’s nothing to worry about. You are obviously frugal. Join me in CR in a couple of years.
Cut and paste from boglehead… Looks like people are looking at SALT impact.
I’m a potential home buyer in a HCOL area where property taxes run at ~2% of value. So $40K/yr in property taxes for a $2M property. Property tax math pre and post Trump tax plan for a high earner looks something like this:
1) Pre trump tax = $40K taxes * (1 – 39.6% marginal tax rate) = $24.2K property taxes per year (tax adjusted)
2) Post trump tax = $40K taxes per year (tax adjusted)
My question, which I understand is theoretical, is how much this extra $16K of after-tax carrying costs should impact the price of a home that sold for $2M before the tax law change (holding all else equal)?
If I discount the $16K/year at 10% in perpetuity, it yields $160K of present value impact or 8% of the $2M property value. If I use a 5% discount rate it would equate to a $320K / 16% impact. Do you guys think this framework is correct and, if so, how do you guys think about your own personal cost of capital when thinking about topics like this?
My purpose is trying to estimate how much prices could fall once this tax change is fully absorbed. I know this question is theoretical (there are a bunch of factors that will influence supply/demand and ultimately the clearing price of a house) but I’m wondering if any bogleheads out there will humor me with thoughts/opinions. Thanks
I don’t live on a busy road. I live on a double yellow county road. Don’t listen to expat.
nwnj says:
August 3, 2018 at 10:34 am
Bad news for pumps, I hear he lives off the interstate.
Living by a busy road can dangerously alter your heart
https://www.thetimes.co.uk/article/living-by-a-busy-road-can-dangerously-alter-your-heart-3pc5rvph6
your boglehead guy ought to get together with yesterday’s roofstock spreadsheet guy and they could have a hell of a weekend together.
Looks I’m going to have to check out this death of a nation movie. I can see efforts of progressives to take away our freedoms at every turn. Non pc jokes on the radio will get you sent to a re-education camp. Stalin would be proud.
Pump, whatz the speed limit on that road?
35 mph
Well, I see people bidding on SFH houses in floodzone, next to highway, no basement, next to a factory, shared driveway houses, next to railway track etc etc
So you being on a local road in Wayne ain’t big deal if the market keeps going like this..
The Great Pumpkin says:
August 3, 2018 at 11:49 am
35 mph
In all seriousness NJD renting may really be an option.
You need to evaluate your soft factors – do you have kids, their ‘own’ rooms, sense of home, school district, etc.
But if ‘sole’ earner means single or divorced take a look at SFH renting. Especially if you may be mobile in the State over the next five or so years (job change, retirement).
The economics of a $650k buy has about $30k annually in mortgage payments (20% down) and $14k taxes for nearly $4k a month. That doesn’t include opportunity cost on your DP. Plus, unless you are going to hit a decade in a purchase on a 30 year mortgage you won’t have appreciable equity paydown so you’re looking to value appreciation from this current starting level.
A $4k rental is a good property v. the above…..I’d probably lean rental.
In my town current rents do not cover cost of carry of the house at current MV. The rental owners all have a much lower basis. You’re taking the other side of that trade.
For anybody following the Sarah Jeong/ New York Times debacle — There’s more:
http://dailycaller.com/2018/08/03/nyt-sarah-jeong-cop-men-tweets/
That’s exactly how poor people buy cars. “What the payments?”
“That is astounding that a CPA would not evaluate the tax deductions.
I of course knew there was a mortgage interest deduction, but I never factored that into how much I was willing to pay for a house. My focus was only on the monthly payment.
The people that buy on the side of a highway or a really busy street or next to a strip mall or in a flood zone. Convince themselves that it’s fine. If the market is hot and the town is alleged to be desirable. Good schools etc then these buyers become even more convinced that they are making the right decision but buried beneath that all is the little voice telling them not to do it. Many times you will then see these house back on the market in a few years or less as these buyers acknowledge it was a mistake and they are hoping for some other poor fools to get them out of their mistake. If they can’t sell than many times you will see the house fall into disrepair as they don’t care anymore. Location is the most important decision when buying a house.
I’ve been praying for the ny times to die for many years. Hopefully this is the death knell.
3b,
Some people don’t mind a Main Street. They like the discount and look at the culdesac location as a premium they don’t want to pay.
Pump, as long as you are in a hot market when it is time to sell, I agree.. Otherwise its a risk..
For example this house, totally old and ( pics are enhanced. not as good as it looks) has a shared driveway.. A narrow 7 feet road shared between your neighbor. Thatz the only way you go to backyard for both houses.. SOLD.. WTF
https://www.redfin.com/NJ/Rutherford/44-Summit-Cross-07070/home/35854850
Pump’s home isn’t on that busy of a road after all. See?
http://bit.ly/BlumpkinHouse
Between a highway and a 22000 volts powerline ?? Really ??
NjDept,
I agree, not easy to sell main rd homes in a down market. Then again, why would you ever try to sell any kind of property in a bad market? That’s how you lose money.
Death by
https://www.liveleak.com/view?t=mGrI_1533254489
Here’s a view from the inside.
http://bit.ly/InsideBlumpkinHouse
I have woods behind my house and across the street. I don’t live on or near a highway.
NJDepartment says:
August 3, 2018 at 1:22 pm
Between a highway and a 22000 volts powerline ?? Really ??
If you have a 2M house – another $15-$30K in taxes you are not going to give one sh!t about.
You won’t even sell your beach house.
Unless you are a Mr. Burns type bigot, you will not care about the taxes. People really don’t understand how much money these people have.
I pay a little over 18k in taxes and it does not phase me at all…..and I can’t afford a 1.5 million dollar home. Nowhere near these big dogs.
If you are rich and obsessed with keeping every dollar because you have a disease, only then will you actually care about the property tax bill.
Mike S says:
August 3, 2018 at 1:38 pm
If you have a 2M house – another $15-$30K in taxes you are not going to give one sh!t about.
You won’t even sell your beach house.
If you are at 500k income a year, even if you pay 50% in taxes, you are still left with 250k a year. You are still left with 21,000 cash to spend per month. And this is only at 500k….imagine what someone making 5 million a year….or 100 million a year….or a billion a year…..these people can get a 70% tax rate and still wipe their a$$ with 100 dollar bills.
People just have no idea how much money some of these people are making.
Pump,
it’s highly irresponsible of you to say that people don’t care about property taxes..
otherwise the governors of NY and NJ wouldn’t be shitting in their pants trying to do the charity model to circumvent Trump’s SALT tax issue..
Just look at the house prices in Nutley, reason they are lower is due to high Tax . You personally might not worry about taxes but average joe will do.. Remember average median home price in NJ is 318K…
It’s all perspective and it’s a mixed bag from mine. My net worth is approaching two million. Am I getting the fcuk outta dodge? Absolutely. I busted my ass to get where I am. When friends were on vacation in Mexico in college, I drove a forklift. When my kids went to camp, I worked at camp! Fcuk you if you think I’m not gonna feel it. Or if you think I can afford it. Go do it yourself instead of STEALING from ME! Got it? And you wonder why I hate this state and this country. The second world is not that far away.
Nj,
It’s the truth. Wealthy individuals don’t care unless they are Mr.Burns type.
Regular people care about the property taxes. They are the ones living pay check to pay check counting every penny. People living in 2 million dollars homes are not normal people.
In other news.
Tell me if I’m unreasonable. Sh1t pipe leaked at my multi due to clog in mainline to street due to too much toilet paper being flushed. This happened last Wednesday. On Thursday, got plumber and called cleanup company to deal with 9×9 sh1t puddle. On Friday as sh1tpuddle is being cleaned notices mold under floor (from pipe leak this winter). Finishes sh1t cleanup and calls mold remediator for me. On Monday of this week, insurance adjuster and mold company work together to figure out coverage. Tuesday, mold guy says he’s going to start on Wednesday. Wednesday mold guy shows up and says, too much stuff in basement, rent a pod to store it in and move it all out. Thursday POD company says no Pods for 7 days due to demand (may need to look into investing here). I borrow 6 skids from work to put in garage. Drive them to multi and tell mold guy to come today. He does and I even pay $450 to have stuff moved to garage. You wouldn’t expect tenants to lift a finger, would you? Monday they take out the blowers. I am on vacation until the following Monday in which I plan to lay down a click floor (paid by insurance).
Tenant calls me screaming mad. I can’t go another week. This is BS, etc. Etc. I walk him off ledge, but come on. Is three weeks unreasonable to deal with all this sh1t? This is a 100 year old house with sub 3K rent for the unit. This is not the Sienna or Park and Bloom! Is this guy realistic? It’s a finished basement where his cats pee and puke. Am I being unreasonable?
Anyone want to lay down a click floor? I’ll give you what my insurance company gives me!
:P
Here comes a real heavy line of storms people. Batten down the hatches.
Nothing pisses me off more than an entitled tenant. Boils my blood.
https://drive.google.com/file/d/0B4EcY86jtyq6NlJqME40dE0yNFlPOVk2TmxpcnNuaWtVXzRR/view?usp=sharing
It just got real dark.
NJD,
I echo some of the points a few of the posters have shared with you (and won’t go into the economic details of purchasing a home and rent vs buy that has been shared extensively in this forum). At the end of the day, do what feels good to you. You are single and doing well so what’s the hurry to buy a home in this market? Invest the DP, save some more, and then, when you are in a situation (perhaps married with kids or on the way) where you (rather your wife) feel the need to settle down, you may very well be able to buy your home in cash (or close to it). Don’t fall into the trap of the mortgage deduction (kinda moot these days with SALT and AMT for some) – I never understood the mortgage deduction logic. (You can consider taking a mortgage out later if you think we will have ravaging inflation down the road.)
Also, consider renting in a town that you really think might want to settle in. It’s a whole different insight living in the town – meeting the people, school parents, certain programs your child may need, etc. – than driving around with a realtor checking out houses in towns you think you like. Living in a town a year or two you find out the the truly nice part of the neighborhoods, what potential developments may be happening in parts of the neighborhood, ethnic/religious mix and if they mingle, etc. In the end, you may not like the town for some reason – perhaps, even just the vibe (like a Ridgewood and Tenafly for me personally) – but then you have the option to easily pickup and move.
I went through what you are going through. I was never much of a homeownership type of guy. Did the typical migratory path into NJ from the city – got married late and moved across the river with one on the way. Real estate started taking off a couple of years after we had moved into a modest townhouse that we rented. Then, it REALLY took off and everyone would do a double take when I said we were renting. One couple, who weren’t very well off themselves, took sympathy on us and said that they would rent out one of their homes to us or sell it to us for cheap. Getting sucked into some of the hysteria at the time, tried looking for a home but it just didn’t make sense. Coming from finance, I kept running the numbers and scenarios but kept on coming back to I’d rather invest the money than put it into a home. (This was during the time when anyone with a heartbeat got multiple mortgages.) I ended up renting for over 12 years in NJ alone. My average income during this period was well north of $500K a year. Yea … it would have been nice to have bought a few homes and flipped early in the mania, but I was late and wasn’t a real estate guy. Take your time, look around, rent in a few towns that you might consider as your future homebase (it will probably change). Don’t spend crazy money on rent (or a car) – you are young (I presume) and single – just get a decent place where you can bring your girls home at night. ;) (And, if the girl complains about your place – then you know she is not the girl to marry!)
Lots of things that are personal come into play in choosing your home (some of which you can’t factor in at this stage of your life and/or will not know until you meet your spouse and/or have children) – so take your time. It will happen when it will happen. That’s what happened to me. And, its turned pretty good. Good luck to you my man!
Pumps – low budget comes to mind in every way when I think of you. Enjoy the races and the smog.
Some people don’t mind a Main Street. They like the discount and look at the culdesac location as a premium they don’t want to pay.
Lib – tenant is complaining about what? Lack of access to basement or garage?
BTW, is anybody else experiencing weird browser behavior on Chrome? I never remembers by handle or email below, starting less than two days ago?
I’m a big user of CTRL+L to type in URLs. Sometimes, again recently, it doesn’t highlight the existing URL to append, instead my keystrokes add to the end of the extant URL.
So it doesn’t populate my handle or email boxes when I post, but it has them all in cache.
Topper,
Thanks for the insight.. I’m old and approaching 43.. When I meant single earner, wife doesn’t work.. LOL. 3 kids I have..
Whatever reason, I didn’t buy all these days.. Not that I could not afford but had a different investment strategy and some work related decisions forced me to rent.. I can buy a 750K house cash if I liquidate 35% those $$ invested in foreign assets.. which takes time. So debating if I should do or sit tight..
My struggle is really, should I bite in this hot market or not.. Having said that, I’m not frugal in any way.. never had to compromise in life and have not yet.. Just the feeling of over paying and the math still doesn’t add up..
Expat – Autofill turned off?
chrome://settings/autofill
NJDepartment – re: “Just the feeling of over paying and the math still doesn’t add up..
Yup been there…
You can’t time the markets, I bit my tongue and bought in 2012, after I convinced myself the house was not an investment, it is a place to raise my kids to my standards.
You will need to at some point stop crunching numbers and consider the intangibles.
Would I rather live in Hawaii sure, but I cannot make the same living there, so I raise my kids here to my standards.
Today’s high will be a low someday, does not mean it won’t drop the day you buy, but after the last crash, we all saw the lengths Bernake and the Government went to prevent deflation. There is some assurance that we won’t see a massive drop because the government will bail, bail, bail and try hard to at least keep it from completely crashing.
Few things on price, and no I am not a realtor.
It is a Buyer’s Market if you can still get concessions.
It is a Buyer’s Market if contingent offers are more acceptable.
It is a Buyer’s Market if request for repairs are easily negotiated.
It is a Buyer’s Market if the buyers can control the transaction such as longer inspection periods, extend closing deadlines etc.
Also from a financial perspective, I don’t think we see the same leverage being applied as during the last bubble, there aren’t fog mirror loans and pick a payment loans.
Another Bubble may not come in our lifetimes again, but who knows since you cannot time the housing markets.
Some people like the discount until they move in and decide it was not worth it.
NJD,
So, if you have waited this long … what’s the hurry? Don’t let some arbitrary life mile posts pressure you. I bought in my late 40s. I gave in to the wife … she just wanted a home.
Not that I think the current market is the same but here is a cautionary tale. I was seconds away (not minutes) from signing the purchase contract on the home I was renting for nearly $1.5 MM approximately 9-10 years ago until I came across a new listing for the house couple of doors down. I was to meet the landlord in an hour to hand in the contract. One of the more difficult decisions I had to make. I pulled the offer, which in retrospect, saved me a chunk of change. It later sold (perhaps 3-4 years after) in the low $900’s. Patience my man, patience. (Dumb luck and serendipity helps too!)
Caveat: OTOH, if the wife keeps nagging, close your eyes, hold your nose, throw logic and spreadsheet out the window and … just do it!
It will work out. (And, you can hangout in your new large cavernous mancave in peace!)
Everyone I know is complaining about their property taxes and they are all at peak earning capacity. They are starting to understand the high property taxes is and will impact the value of their house and the price they will receive.
Ask people in West Orange
3b says:
August 3, 2018 at 3:59 pm
Everyone I know is complaining about their property taxes and they are all at peak earning capacity. They are starting to understand the high property taxes is and will impact the value of their house and the price they will receive.
Topper,
Not really in a hurry..
Strange that I backed out from an attorney review in 2005 after checking this blog.. That was a 650K house that went underwater and sold later for 400…
Not to mention that saved down payment went into another investment which did really well..
Yup. patience..
NJD:
“Invest the DP”
Truer words could not have been said. And this comes from someone with two homes. I WISH, WISH, WISH I rented and invested the DP and put my excess into the market. I wouldn’t even be worried about overpaying for a home right now. I’d have so much fcuking cash, I’d buy anything.
And international markets are probably the place to be right now. They’ve been quiet for a while. Don’t take from the bottom of that cycle and invest into the top of the RE cycle.
Just rent. It’s OK to miss the mania. Unless any of your friends sold, they missed the mania too. Trust me.
Grim, it’s not just Chrome. Firefox too has name and email cached but no longer auto fills.
This auto fill is killin me..
NJD:
Just on my multi I probably will have paid 300 K in interest. I had about 100K DP. Dow was at 10K. Forgetting the interest, my DP would be worth 250K today. Back of the envelope, that 300K in interest would be another 600K today easy. So call it 850K very conservatively. $2,000 x 12 x 30 is $720K after 30 years if I rented. But what did I pay in property taxes insurance and maintenance. Propably another 17K per year as homeowner. So that’s another 500K. So who won? Rent…I would have paid 720K. Buying, I paid closer to 1.5 million. Who won? Your friends or the renter?
I wish wish wish I rented!
Libturd,
Before you log off for the day, check this out to get you pumped.. LOL. Crazy skills
https://tinyurl.com/z6ygxdd
https://tinyurl.com/hzwefel
Lib,
You leave out the cost of raising your family in a rental. You think it’s easy to find places that will rent to a family? You like telling your kids they can’t plsy in the yard? You like being forced to move and then not being able to find another rental in that school district?
Crunching numbers is dangerous when you leave out all the hidden costs and headaches?
Juice box gave dead on advice in his post.
Stop being so scared of getting the price right and instead be scared of not doing right by your family.
DP = down payment or double penetration?
To a point. Did high taxes stop Montclair? 🤔
What goes into prices is a market that focuses on many criteria, not just property taxes.
3b says:
August 3, 2018 at 3:59 pm
Everyone I know is complaining about their property taxes and they are all at peak earning capacity. They are starting to understand the high property taxes is and will impact the value of their house and the price they will receive.
Pump,
Not against home ownership at all.. As far as renting and yard, I have one of the best yards and basement in town.. LOL.. So not missing anything. if you know how to find them.. of-course its a little effort and luck..
But again, house next to a highway can be bad too.. Just kidding
http://www.dailymail.co.uk/health/article-6021667/How-living-near-busy-road-cause-heart-problems.html
Both are pretty painful I would imagine.
Libturd,
If you had installed a psyllium husk fiber dispenser in the kitchen and none of this would have happened.
Give him a discount on this month’s rent?
Stuff happens, but renters probably don’t understand that as well as homeowners. That’s why I wouldn’t want the job of being a landlord.
Pumps – The man was brave enough to cancel a purchase in 2005 and has fought off his wife on a home purchase for the last 13 years or so. I don’t think it is fear running through his veins at this point.
He just wants to hear from us that there is no bubble…
No bubble I say, not yet.
https://fred.stlouisfed.org/series/NYXRSA
For every one Montclair there is 10 of my town. Which is a blue ribbon train town. And whose to say everyone in Montclair is fine with high property taxes.
Was thinking about sending them some prunes.
Normally, I would cut them some slack, but they are impossible. Even this morning, they said they would be there until 9am. At 8:15 I get a call from the cleanup company. No one was there. Then, they don’t want ANYONE doing work when they are not there. Not even me. These are my millennial tenants. Their lease expired months ago. Would love to replace them. They suck. I put in water sensors, they change their wifi passcode. I guarantee you they are going to hit me with, can you do a mold test (after this is done). They are those kind of people. Nothing I can do makes them happy. And that unit is super easy to rent out. Everyone wants a ground floor unit. Plus I have stainless appliances and a six burner stove.
Juice,
It’s beyond obvious that we are nowhere near a bubble, but some people refuse to see the writing on the wall. If this is a bubble, it’s pathetic and weak.
Lib why don’t you get rid of them?
Do you understand that property taxes are not the deciding factor on the price of a home? It’s not. Does it play a role, sure.
3b says:
August 3, 2018 at 4:54 pm
For every one Montclair there is 10 of my town. Which is a blue ribbon train town. And whose to say everyone in Montclair is fine with high property taxes.
Strange situation.
Actually 75% of my net-worth is in RE.. Just nothing in US.. In one of emerging markets where the appreciation since 2000 is in the 700-1500% range.. Just wish I had more $$$ to invest before 2005.. It has been a crazy ride.
Yeah Juice box, you are right.. Want to hear that.. I think i heard it..LOL
Juice Box says:
August 3, 2018 at 4:54 pm
Pumps – The man was brave enough to cancel a purchase in 2005 and has fought off his wife on a home purchase for the last 13 years or so. I don’t think it is fear running through his veins at this point.
He just wants to hear from us that there is no bubble…
No bubble I say, not yet.
https://fred.stlouisfed.org/series/NYXRSA
Lib – Regarding your tenant. I vote you are being unreasonable if the affected space that is no longer available is part of the space you lease to the tenant. I’m willing to bet that you have a “Quiet Enjoyment” clause in the lease, the tenant is right to request you hold up your end of the contract.
Just part of the fun of being a landlord.
I thought about it. But it’s not their fault that we’ve had a string of bad luck in the basement. It’s just they always feel the need to vent like I’m their shrink. I always fix everything as quickly as possible. They just think everything is immediate. For the dumb sewer back up, I had to call 5 different plumbers, just to find one who would come in the next day (emergency fee included). I really should give them the boot. They lied about their cats, he claims he was going to paint the basement and didn’t. The list is endless. I’m too nice.
Doofus do you understand that property taxes impact the price that people are willing to pay for a house? It’s a huge deciding factor when purchasing a home for most people.
Pump,
I kinda of stopped looking for brand new houses in my town and now looking for house that are built on existing basement/foundation.. 6 -10K per year difference in property taxes.
I donno if there is a CAP in Nj for 2% but I’m being told the taxes on new house is, sale price X 2.9%..
Look at this Nutley house. One of highest tax county in the US.. 27K per year tax..
https://www.zillow.com/homedetails/170-Satterthwaite-Ave-Nutley-NJ-07110/82657784_zpid/
Sold for 1.25M in 2007. Went to auction for as low as 493K.. and now on market for 835K.
I bet the guy couldn’t afford taxes… Not many can.
Lib – I feel for you but so glad I ain’t a landlord. On the other hand, commercial properties (like a small strip mall type of thing) seem enticing at times. But then again, I don’t know. Although, 3 weeks of work is a tough proposition for anyone to bear.
Pumps – I think there are plenty of rentals for families with nice backyards in good school districts. Sure, moving is dreadful … although we stayed in our 2 rentals for 6-7 years each. Even then, moving still sucked. And, as a tenant, not having to deal with what Lib has to deal with … priceless! Hello Lib? The AC is out. Or, and the toilet is backed up. Can you send over someone? ;) (Sorry Lib – love ya man!)
Home,
I offered to put them up at a hotel. It’s the basement for christ’s sake. It has a sh1tty IKEA couch, and a tiny TV. What kind of break in rent do you give? $100? Big deal. It wouldn’t matter. If I’m fixing things in a reasonable amount of time, isn’t it reasonable that they may temporary lose the use of part of their place?
And it’s not blocking anything. There is a tiny toilet room and the washer and dryer that they can still get to.
I think you are too nice.. When our heater broke, I stayed in my friend’s place for a day and gave my landlord time to fix it..
No wonder he hasn’t raised my rent for 10 years..
I never raised rent on him when his yearly lease expired.
Now I know why you don’t mind renting, your landlord is subsidizing your housing costs. This is not the norm, you got lucky.
“No wonder he hasn’t raised my rent for 10 years..”
Lib you are being too nice. I’m a very responsive landlord, you also should have a good lease with your tenant. Mine explicitly covers scenarios such as this, it also absolves me of any liability and requires the tenant maintain insurance for their possessions, my lease requires the tenant to indemnify me in the event someone has an accident on the premise. Also any lease you have a tenant sign should have a rent escalation(at conclusion of the lease rent jumps $400-500 or so so you can persuade the tenant to re-up in order to have a normal rent again or else they can pay for the privilege of month to month. You’d be amazed most tenants won’t or can’t understand pages of legalize and generally just sign. That being said I’m sure my lease has some unenforceable clauses and certain things wouldn’t stand up in court(I mean no judge is going to allow my broad and very confusing indemnification clause to stand).
“Quiet enjoyment clause” who puts stuff like that in the lease anymore? Again the rental market is tight in NJ so give them an extremely bad lease when you have 2 or more people offering on the place and then leave them alone if they are good tenants, if they are bad put the screws to them and try to get them to be so fed up they pay to break the lease. As you said yourself it’s not the best business, property tax kills your ability to make a profit in this state. As such this is business, you need to look out for your best interests.
We had a sewer issue yesterday. My wife and I were watching our Yankees get decimated by the Red Sox and she claimed she heard the toilet in our downstairs bathroom make a loud noise. She went running in and I followed. I saw nothing, she said she saw something bubbling up in the toilet before I walked in. I told her she was crazy. A few minutes later the toilet overflowed. My wife was doing a load of laundry in our upstairs washer at the time and it was obvious that our sewer line was not working causing the washing machine upstairs to back up to the lowest point, our first floor half bath. My wife and I started mopping like crazy, then…the rinse cycle emptied and we were doing it again.
Over the next few hours I figured out where the obstruction had to be. We have two branches in our plumbing system, one for the original upstairs bathroom, another for everything else (Upstairs washing machine, upstairs master bath, downstairs kitchen sink/dishwasher, downstairs half bath). All of the clogged branch comes from a 2009 addition to a 1906 house. Luckily we still had 1 of 3 bathrooms in working order. I figured out that the obstruction had to be ahead of the kitchen because even running water there, the last downpipe in the affected branch, raised the water level in the toilet. A full master bath and the washing machine dropped down 25 feet before the kitchen drop. 3″ PVC into 4″ old school pipe, about 10 feet before the “Y” where both branches meat the sewer main.
I managed to get a recommendation for a local drain guy. Called him, he was already on his way out of town for the weekend, but…he gave me a number for another local guy who sent some guys right over, about 4PM on a Friday. Instead of using the clean-out in the basement and having to catch all the wastewater, they removed my downstairs toilet and snaked it from there. They had to use most of the 50 foot range of their machine, but were successful. It probably took them about 2 hour total.
Bill: $275
Paid for in full by landlord giving his credit card to them over the phone. First time I had to tap him for anything in 18 months, so he seemed more than happy to pay, especially since I paid my $2950 rent right on time two days ago, just like I always do.
Downstairs bath (and kitchen and walk-in pantry) are all 13 inch square granite tiles, so no problems with the mop up either.
I know it’s hard for some of you to believe, but the quote below tells you that we are not in a bubble and that it’s a very good time to buy based on long term appreciation. When home ownership has lost its allure, go the opposite direction of the lemmings.
“It all seems to confirm that the new economic realities, along with the changing preferences of the younger generations, are changing what the American Dream means.
“Homeownership has lost its allure,” James Hughes of the Rutgers Bloustein School said.”
https://www.nj.com/data/2018/08/homeowners_are_fleeing_these_nj_counties_see_the_biggest_winners_and_losers.html
Despite some on this blog finding favorable rental terms, the truth of the matter is that renting is supporting the profit model of the landlord. Yes, you can find an idiot landlord who is running an unprofitable business by offering below market rates, but they are few and far between. Plus, this generation of landlords is not like the past. Current generation of landlords are made up of more cut throat wall st type looking for places to invest their money. They are not the type to subsidize tenants housing by not raising rent because the “tenants are good.” Renting will become a nightmare for the current generation of renters.
“There is confusion about whether a correction and a bull market can coexist. The answer is unequivocally yes and it is in fact healthy to have not only corrections but swift rotations in equities between growth/value, large cap/small cap and domestic/international. This bull market was started, was fed and got fat on monetary accommodation and now is getting lean, mean and chiseled on animal spirits driven by pro-business tax cuts. China and Europe are still fat on accommodation and undoubtedly are going to be disrupted until they compete on a pro-business platform. This may cause corrections but ultimately is positive for the global markets as this double-header bull market begins — with USA in the lead.”
Six factors to watch as the bull market pushes itself toward an endurance record – MarketWatch
https://apple.news/ArXiPoskMTViOAiLpkzfvXw
“Left-leaning American think-tank the Roosevelt Institute found that from 2015 to 2017, U.S. companies spent 60 per cent of their profits on buying back their own shares, rather than investing that money in new ventures or pay hikes.
The report calculated how some companies could have spent that money differently:
McDona!d’s could have paid its 1.9 million workers almost $4,000 more a year.
Starbucks could have given every worker a $7,000 raise.
Lowes, CVS and Home Depot could have each given their workers raises of at least $18,000 a year.
And with the tax reform bill passed last year, which lowered the U.S. corporate tax rate from 35 per cent to 21 per cent, there’s every indication those numbers will soon look even gaudier, said Katie Bardaro, chief economist at compensation data firm PayScale Inc.”
It’s crazy. These individuals claim tax cuts are needed to grow the economy because it puts more money in the consumers hands which leads to long term growth. If they understand this, how do they not realize how important raises are to creating long term growth in the economy? How can you endorse only one of these positions, but not both?
Guy is on the same page as me. Great Depression part two coming in the second half of that decade right after roaring 20’s 2.0.
“Elliott presented us with an understanding of financial markets, which are not linear in nature. This enables us to understand that once this long-term bull market runs its course in the mid-2020s, it will usher in a regressive period that will likely destroy much of the wealth that was accumulated during the preceding bull market.”
Opinion: Prepare for pain as social!st policies spread across the U.S. – MarketWatch
https://apple.news/AlPLC8OLCSCiI9xefwhe2PA
Pumpkin works in finance?
Hard to believe, maybe he’s running drugs, and sampling his own product.
To not understand how a publicly traded company works. Pretty sure even the mailroom guys know that.
I’ll give you a quick summary of how this would actually work, since you seem to believe that CEOs can somehow be the altruistic kings of their own personal kingdoms.
Expenditures of that scale would likely require board approval. Remember, the board is elected by the shareholders (the owners) of the company to ensure their interests are best represented. Elected board members are considered fiduciaries of the shareholders (you may need to Google what this means).
This king CEO would approach the board with his idea, they would consider it, and would likely say no, this doesn’t represent the best interests of the shareholders.
Approached with a buyback, they might agree, they believe more in the companies ability to grow itself, thus buying back shares and increasing shareholder value (or they might not).
But to believe the public owners of the company would get no say in this, that’s just absurd.
You can’t expect companies to just hand out giant chunks of cash because they took in more revenue. The only way to get workers paid more is to increase the bargaining power of labor. This is done by restricting the competitiveness of imports through tariffs, controlling a massive inflow if cheap labor via immigration (legal or illegal), and rebuilding a manufacturing base, which would decrease the amount of people working in retail.
I know they would never give it to workers, past 30 years of stagnating wages says so. My point was to simply show the economic boom the tax cuts would have produced in the economy had they been used the way the tax cuts were intended to be used….to put money in workers pockets and create demand. So much for that.
“The report calculated how some companies could have spent that money differently:
McDona!d’s could have paid its 1.9 million workers almost $4,000 more a year.
Starbucks could have given every worker a $7,000 raise.
Lowes, CVS and Home Depot could have each given their workers raises of at least $18,000 a year.”
“The only way to get workers paid more is to increase the bargaining power of labor.”
Or, I would offer, to have the productivity (profitability) of the employee to increase.
Any business owner hopes he can double his payroll and raise his employees wages – it means he’s taking in that much more revenue and revenue per employee and making all that much more money for himself.
As I tell my ex- when she continues to get snarky about finances…I truly, truly hope my alimony increases to $2m annually……..because that means I’m pulling in $5m.
Buybacks occur because CEOs and Boards have no other alternative to deploy the cash at a higher return. If capital or personnel investment offered a better return the funds would flow there.
Yes, maybe if they stopped concentrating capital, they would have some demand to invest in, but that flies over their heads just as it does with you.
All that capital they are sitting on and nothing better to do than buy back shares. Concentration of money has a beautiful effect of the economy.
“Buybacks occur because CEOs and Boards have no other alternative to deploy the cash at a higher return. If capital or personnel investment offered a better return the funds would flow there.”
On mcds alone, 1.9 million consumers at the bottom of the economy would have had a 4,000 dollar spending increase in the economy. Instead the tax cut was cannibalized by the top, concentrating more money at the top at the expense of consumer demand in the economy. Brilliant!!
Imagine the impact on the economy from every Lowe’s, CVS, and Home Depot employers having 18,000 more dollars to spend every year. The velocity of money in the economy would be incredible.
Pumkinhead, I think this is what you want.
No union, just pissed off workers.
https://youtu.be/i7Kp8Ei7HEc
Imagine the impact on the economy from every Lowe’s, CVS, and Home Depot employers having 18,000 more dollars to spend every year. The velocity of money in the economy would be incredible.
Weren’t you arguing the other day that no one cares about paying 18000 in taxes? Maybe we just set those to zero?
Pumps, every day you find new and amazing ways to prove your ignorance. So the good times ended in 1988? Somehow my salary tripled from 1987 to 1997 when I first broke 6 figures. The salaries I was handing out three years later were close to 6 figures. You don’t study history, you don’t read, and you were crying to your Mom on the street corner 30 years ago, so how could you possibly know what wages were?
I know they would never give it to workers, past 30 years of stagnating wages says so.
Ex, I haven’t replied to one of sh1thead’s posts in nearly a year despite him still obtusely commenting directly to me.
You (and 3b, BRT, Lib, etc) should follow. Stop trying to teach a pig to dance, it only wastes your time and agitates the pig.
“Proudly Pumpkin-free Since October 2017”
You’re right.
Employers pay employees just enough not to quit, employees work just hard enough not to get fired.
“employees work just hard enough not to get fired”
Not disagreeing for the majority of employees, and demonstrative of my point.
$50B windfall lands in a company’s lap? Why would you give that type employee anything more? It’s wasted, zero ROI.
Best anecdotal counterpoint…Admin Assistants at IBs. When I left a number of years ago mine broke six figures. They were not the above type employee. Their work ethic and ability to stretch their skill set provided demonstrable if not objectively measurable incremental value to the business. So they got compensated commensurately.
No employer is going to pay someone in excess of the incremental value their job produces. Would your spouse pay someone for day care in excess of what she is making from her job in lieu of staying home? Of course not. Not worth hiring the nanny at that pay.
The value of a worker is never understood by some until these workers ALL decide to stop working. Only then is the value of a worker brought to true light at the negotiating table. If workers continue to come to the table with no negotiating leverage, people like “lefty” will continue to take a big dump on avg worker compensation.
Not Potatopumkin says:
August 4, 2018 at 1:56 pm
Pumkinhead, I think this is what you want.
No union, just pissed off workers.
https://youtu.be/i7Kp8Ei7HEc
Hasn’t rained here in 6 months (no lie) …. and people are forking over millions for average bungalows
Aside from my cynical statement above, which is still mostly correct, I believe something else as a truism that applies to the workplace:
People will work harder for recognition than they ever will for money.
High levels of sincere recognition combined with even modest compensation increases begets much more productivity than just about anything else.