From Bloomberg:
Curbing Our Enthusiasm Over Rising Home Prices
Home prices went up in March. That was the news Tuesday from S&P/Case-Shiller; all indications are that April was an up month too, and that this summer’s “selling season” will see continued price increases. Bit by bit, prices are regaining the ground lost during the long collapse from 2006 through early 2012.
In some ways this is great news. It means fewer underwater mortgages. It means better times for lenders, real estate agents and builders. It’s a sign of broader economic health.
Still, if there’s one thing we should have learned from the housing bust, it’s that rising home prices aren’t an unalloyed good. Rapid price increases in the early 2000s directly led to the subsequent crash. Sale prices lost all connection with both rents and incomes; after a certain point they were going up mainly just because they were going up, and buyers feared missing out. That couldn’t go on forever.
Even short of a bubble, though, higher home prices can be problematic. As economist Matthew Rognlie reported in a famous paper last year, the rising value of housing has been a major driver of income inequality in the developed world. It has also, economists Peter Ganong and Daniel Shoag found in another paper, caused incomes to diverge among regions in the U.S. And it doesn’t really take an economics degree to understand that when homes get more expensive, housing becomes less affordable.
…
With pretty much any other good or service, higher prices are something to complain about. And yes, there are those who complain about high housing prices. But even with the big fall in the home-ownership rate since 2006, 63.5 of American households live in owner-occupied housing. For homeowners, housing isn’t just something one consumes; it’s an investment. And when your investment rises in price, that’s a good thing.This simple truth explains a lot about public policy surrounding housing in the U.S. The home mortgage interest deduction is a subsidy for the affluent that serves no discernible economic purpose, but is almost impossible to get rid of because removing it would (1) raise taxes for those with mortgages and (2) depress home prices across the board. Zoning and other land-use regulations have been accused (and to some extent convicted) of segregating Americans by income and slowing U.S. economic growth, but it’s almost impossible to get rid of them because they raise the price of existing homes.
So no, I don’t see my nation suddenly embracing the idea that rising home prices are a terrible thing. But it seems like it’s worth the effort to try and at least sow a little doubt.
Good Morning New Jersey
They should show the nanny cam video to the prisoners on movie night and they will give Shawn boy some real justice
report dense but mostly well presented high impact charts
mary meeker (kleiner perkins) from the code conference
while ostensibly tech based packed with global economic info in the first 40pp. check out p 25
http://www.kpcb.com/internet-trends
From above:
“The home mortgage interest deduction is a subsidy for the affluent that serves no discernible economic purpose…”
Hey Eeyore, still awaiting the calculation of your personal tax avoidance shield from a couple weeks back…
leftwing…nice read. The debt increases in government and corporate versus huge decline in personal and financial is interesting.
With Monmouth county going to yearly reassessments higher prices are starting to hurt those on fixed income or have not seen raises in a year or two .In beach communities prices have risen to their highest levels ,forcing long time residence out .However on the flip side waterfront hasn’t come back and these homes have hurt the tax base by surpressing prices of higher priced home while the lower priced homes have risen and are taxed more due to their higher prices .
re: #6 – “Monmouth county going to yearly reassessments”. They county is allowing the towns to opt out of the Assessment Demonstration Program, do to the controvery also some towns like Middletown are doing their own assessments instead of paying Realty Appraisal Coto do it.
My taxes have gone up a total of $300 in three years. Few new comps by me, prices pretty stable etc. I don’t expect a huge jump in taxes. From what I now hear some of the older teachers making above $100k are retiring now too so I don’t expect school taxes which is 2/3rds of the tax bill to shoot up anytime soon. There are some newer construction homes that have annual tax bills north of $20k languishing on the market. Most are priced near a $mil so no wonder.
Reassessments only hurt those who are under assessed. That Realty Appraisal Company is a crock of sh1t. They blew the reassessment in Montclair something fierce. All of the new homes ended up underassessed and all of the existing homes made up for it. They failed to consider any new home sales in the prior two years when calculating assessments. It’s all a joke. They hire kids at $8 an hour who walk around and check off boxes. The data is put into a computer where an algorithm is performed that uses changes from the last assessment to the current to determine if you appealed or not. If you did, your prices will go back up. If you didn’t it will stay the same. Recent sales be damned. The smartest thing a town can do is to review all of the properties every year based on recent sales and make minimal adjustments. Then, no one wins any appeals and Realty Appraisal doesn’t get paid. Huge savings come from the town not having to fight appeals. Yet I only know of a couple of towns which do this.
[8] Boston had a very streamlined assessing system when we bought in 2002. It seemed to be that they simply assessed you at whatever you payed for the property, so long as that wasn’t lower than the current assessment. I (literally) called them on it and some nice lady did something to my property record while I was on the phone that made our property tax lower than all other similar units instantly and it has stuck for 14 years, so I’m no longer a squeaky wheel (which was probably their intention).
“63.5 of American households live in owner-occupied housing”
So how is it only the affluent benefit? Only the affluent can afford a mortgage?
leftwing says:
June 2, 2016 at 7:28 am
From above:
“The home mortgage interest deduction is a subsidy for the affluent that serves no discernible economic purpose…”
Hey Eeyore, still awaiting the calculation of your personal tax avoidance shield from a couple weeks back…
It’s unbelievable how this Zika mom and her conspirators played all of us. Trump will be getting a big boost from this.
I think Zika mom and Tan mom should get together and host The View.
My taxes have gone up a total of $300 in three years. Few new comps by me, prices pretty stable etc. I don’t expect a huge jump in taxes. From what I now hear some of the older teachers making above $100k are retiring now too so I don’t expect school taxes which is 2/3rds of the tax bill to shoot up anytime soon. There are some newer construction homes that have annual tax bills north of $20k languishing on the market. Most are priced near a $mil so no wonder.
The amount the teachers make has nothing to do with your future school taxes. The school budget is essentially fixed at a 2% growth rate, which enables them to pass a budget without a vote. I haven’t seen any school districts willing to go beyond that and risk a vote down. Regardless of how many teachers are making 100k, the budget is still the budget. And from what I’ve seen, every time two teachers making 100k retire, it gives them an excuse to hire two entry levels at $45k and create a brand new $110k admin position.
If zika mom just came out and said that she came here to soak the health care system for everything she could(rather than clinging to this thinly veiled “just visiting” lie) I would respect her for it.
Flipping Heats Up
http://finance.yahoo.com/news/house-flipping-heats-creating-home-132611206.html
USZA – The United States of Zika Assimilated
According to Fox: The mother was diagnosed with Zika in Honduras, where the virus is active. She traveled to New Jersey, where she has family, to seek treatment.
According to the WP: “I told my gynecologist that I had an allergic episode,” she recounted in Spanish to Fox News from her hospital bed before the birth. “He said, ‘Don’t worry, everything will be fine. I don’t think you will be affected.’ Then I had an ultrasound, and everything looked fine.” But her grandmother, a microbiologist, remained concerned. She sent a blood sample to the U.S. Centers for Disease Control and Prevention, which found that the woman was infected with the Zika virus, according to the local paper, The Record. The woman has said she believes she contracted the virus through a mosquito bite but isn’t sure.
I have French in-laws through my sister. I wonder if I could travel to France with Baby D and get free Proton Therapy?
#18…my understanding that “residents” of France, not just citizens can avail themselves to the healthcare system there. Part of the research I did about retiring abroad.
Or I could just don a berka.
That might be my new nickname. Donna Burka.
….Fetty Wap….
I was trying to get an idea of how much homes in northern Bergen county may have appreciated in the last 4 to 5 years but am running into some conflicting data that doesn’t jive with the recent headlines of 4-5% annual price appreciations the last few years. Using Case Shiller (using NY Home Prices) would seem to indicate roughly an 8% appreciation over the past 4+ years whereas the NAR Median Sales Price (using NY-Wayne-White Plains) seems to show 2-3% appreciation since 2013 (most recent available). Trulia/Zillow (not that I give those much consideration) shows about a 12% appreciation over the period for the Top Tier (I think that is defined as $750K+) homes in my area. What am I missing here? Why are these numbers all over the board? Would using the good old rule of thumb of 4-5% increase annually (from 2012 or so) be good enough? Thoughts?
go for it. stay there for the rest of your life
Libturd questioning the gender of Hillary’s Cankle fluid. says:
June 2, 2016 at 11:57 am
I have French in-laws through my sister. I wonder if I could travel to France with Baby D and get free Proton Therapy?
@brianefallon
Trump U is devastating because it’s metaphor for his whole campaign:
promising hardworking Americans way to get ahead,
but all based on lies
Re: [23];
When the shooting starts, I want to be there to see Anon get himself a new 12-gauge pie hole in the base of his skull.
What a despicable excuse for a human being.
@StephenKing
Say, here’s an idea!
Let’s turn America’s nukes over to a bad-tempered asshole with no knowledge of foreign policy.
What could go wrong?
Re: [26];
Good news! We’ve got 7 years’ of recent history to look back on and find out!
“go for it. stay there for the rest of your life”
Now isn’t that clever. Did your lunchroom aide help you come up with it or did you come up with it all on your own?
“Let’s turn America’s nukes over to a bad-tempered asshole with no knowledge of foreign policy.”
Or, you could turn the nukes over to HER, who doesn’t even understand the most basic tenets of security even though she was Secretary of State. I’ll take Trump with his hand on the button long before I trust HER.
Good article criticizing that meaningless book. This quote is dead on. Why I will never understand the purpose of billions.
“I see no special heroism in accumulating money,” Taleb wrote, “particularly if, in addition, the person is foolish enough to not even try to derive any tangible benefit from the wealth…. I certainly do not see the point of becoming [a millionaire] if I were to adopt Spartan (even miserly) habits and live in my starter house.”
http://www.latimes.com/business/hiltzik/la-fi-mh-the-death-of-the-millionaire-next-door-dream-20150310-column.html
We must always remember the 4 brave Americans who died at Trump University, and how Trump tried to blame it on a youtube video.
Owning a company or shares in a company is not tangible? I must have missed the [dictionary] book burning party.
32- It wasn’t a hit piece on billionaires. It was a hit piece on people who accumulate money and do not spend it. I just threw in the billionaire line as a serious question as to why anyone would want billions of dollars. Not saying take it away, just asking why you would want it. Even if it is in shares of a company, sell and go on with your life. Go see what life has to offer besides accumulating money.
It’s like you have a winning lottery ticket, but refuse to cash it in and go live life.
32- Dude didn’t even go on vacation, what purpose did that 8 million serve?
“That brings us to Ronald Read, who died in June at the age of 92 in Brattleboro, Vt., and was soon discovered to own a safe deposit box stuffed with stock certificates and other investments totaling $8 million. The news broke last month, after it was learned that he had bequeathed millions to his local library and hospital.
There’s no doubt that Read’s accumulation of wealth from a lifetime of work as a service station hand and later an employee of his local JCPenney was an exceptional achievement. On CNBC, a panel of investment types praised his “strategy,” which appeared to consist of buying dividend-yielding blue chips, leaving them alone and spending little on himself.
But it’s hard to know what life lessons one should draw from Read’s experience. In part that’s because his life story already has been subjected to a certain amount of caricature. He was frugal but not the isolated loner who never spent a dime, as he’s sometimes depicted.
Read’s one marriage, at 38, brought him two teenage stepchildren, who he moved into a Brattleboro home he bought for about $12,000 (in the early 1960s) and supported through college. “He was a super good stepdad,” his stepson, Phillip Brown, 70, told me this week. He “never really took a vacation,” Brown says, and remained healthy well into his 80s.
One of CNBC’s analysts suggested that Read’s success could be replicated by merely investing $300 a month and letting it ride for 65 years; at an 8% compounded investment yield, that sum would grow to $8 million. That seems doable on the surface, but could it be done by a low-income laborer starting today? It’s extremely doubtful.
For one thing, as the investment website Philosophical Economics rightly observes, that $300-a-month investment estimate ignores inflation. “Sixty-five years ago, $300 per month was a very large amount of money…. No janitor on earth would have been able to afford it.”
The website calculates that the required investment was $524 a month in 2015 dollars. That would have been a real challenge for someone in Read’s economic position, so he deserves major props for achieving it through what seems to be genuine discipline in his lifestyle and investment practice.
But the real secret to his success was catching the asset wave that Taleb mentioned. In other words: luck. The period in which he invested started with extreme undervaluations in the equity market. BusinessWeek’s famous (or infamous) “Death of Equities” cover story ran in August 1979. Since then equities have been on a long-term tear; $100 invested at the start of that period would be worth $2,000 today.
But these trend lines occur less than once per lifetime, and ’70s-vintage rock-bottom valuations, which were themselves the product of a high inflation and interest rate environment, aren’t in place today, when inflation and rates are near historic lows.
Read’s frugality assisted his portfolio in another way. Since he apparently felt no need for the money, he didn’t have to draw it down at various low points — say in March 2009, after it had lost nearly 60% of its value at year-end 2007. And by not selling, he didn’t incur capital gains taxes, which were extinguished upon his death.
To sum up, we should admire Read for living in a style that suited him and that would eventually benefit at least two deserving nonprofit institutions in his community. But it’s one thing to admire that lifestyle, another to aspire to it.
“The Millionaire Next Door” elevated self-abnegation to an investment rule — what Thomas Frank, another critic of their book, termed the authors’ “militantly Calvinist attitude toward consumption” in which “saving and investing are ends in themselves, evidence of moral virtue, while spending is empty dissipation.” Olen, among others, mentions the neat irony that Stanley met his end while driving a Corvette, not normally a symbol of asceticism.
Sometimes spending isn’t a choice, either. If Read suffered from poor health during his working years or required long-term care, his estate would be a fraction of what it was.
For the rest of us, saving and investing is an act of deferred gratification — by waiting, we have more to spend on goods and services that please us. “I see no special heroism in accumulating money,” Taleb wrote, “particularly if, in addition, the person is foolish enough to not even try to derive any tangible benefit from the wealth…. I certainly do not see the point of becoming [a millionaire] if I were to adopt Spartan (even miserly) habits and live in my starter house.””
“…he had bequeathed millions to his local library and hospital.”
The airlines, hotels, and travel agents should sue the sh!t out of the library asking for their fare share.
[27]Moose – This made me laugh.
Re: [26];
Good news! We’ve got 7 years’ of recent history to look back on and find out!
Maybe he didn’t live on a busy street so he was able to relax at home?
32- Dude didn’t even go on vacation, what purpose did that 8 million serve?
66 people shot and 5 dead over Memorial Day weekend at the zoo known as Chicago.
[69] 66 shot over the weekend, but 66 dead for the month, breaking a 21 year record. Nice job Rahm.
http://www.chicagotribune.com/news/local/breaking/ct-chicago-may-violence-20160601-story.html
[26] wasteofwhite
Your side said the same thing about Reagan
And yeah, I just said that.
http://www.nj.com/news/index.ssf/2016/06/why_nj_could_should_be_two_separate_states.html#0
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