In reply to pheller :
Why did they hold on to it while it depreciated?
That you would ask that says a lot. Land depreciates when demand is low. There are lots of reasons why demand may be low, but a common one would be too little dollars chasing too much available land. They hold onto it because no one is willing or able to buy it. Except investors who can and do buy low when it's not desirable. Which is actually good for the people that want to sell. Investors buy the land when no one wants it and sell it when demand and value go up. Whenever you say someone shouldn't be able to buy land, you are also saying that someone else shouldn't be able to sell it.
pheller said:
Steve_Jones said:
pheller said:
Then he'd go to the property owners and say "hey, I've noticed your property sitting vacant for a few years now, can I buy it from you?" And 9/10 they'd give him an "eff you" price. Years later, he'd still see the property sitting there, doing nothing. I even mentioned a vacant restaraunt across town and he was like "yep, I've actually made them multiple offers and they keep turning me down, despite it rotting away."
Then his offer is not high enough. It's a simple concept, the seller sets the price, not the buyer. If I want to buy your car, I have to offer you enough to make you say ok, I cant offer you lower than it's worth then complain how you didn't take it.
In other words, same answer as last year...
Ok, but they should be taxed on the appreciation of the land for which they did not contribute. Basically, if the property was bought for $100k, used for ten years where it appreciated to $200k, then abandoned for 10 years where it appreciated to $300k, then they should be taxed $100k, because they were not around to contribute to that appreciation.
Tell me you don't understand assessed value and property taxes without telling me you don't understand assessed value and property taxes.
if property goes up in value taxes go up too. Unless you're wanting to prohibit people from making a profit which is what you are sounding like now.
SV reX
MegaDork
2/14/23 6:53 p.m.
Oh no! Not this worthless thread again!
In reply to pheller :
You are not listening.
There is nothing wrong with your ideas, IF there is local support that wants to adopt them.
On THIS forum, in various parts of the country, we STRONGLY disagree with the idea.
So get them adopted locally and prove us wrong.
It is completely ridiculous to propose something like this on a national forum and expect everyone to get excited about it. Perhaps it would work in AZ. Run for office, or support someone who can make it happen.
In my area?? A BIG FAT NOPE.
SV reX
MegaDork
2/14/23 6:57 p.m.
In reply to pheller :
Your investor friend is a cheapass. He hasn't proved anything you are advocating. He simply isn't willing to offer the sellers what they want.
He moves on because he is looking for discount bargains.
The sellers have made it clear they want to make money. He can't make a deal with them because he isn't offering enough. That's all.
Duke
MegaDork
2/14/23 9:02 p.m.
SV reX said:
In reply to pheller :
The sellers have made it clear they want to make money. He can't make a deal with them because he isn't offering enough...
...because he wants room to make more money himself.
docwyte
PowerDork
2/15/23 9:47 a.m.
In reply to pheller :
That sounds like a plan for nothing to ever get voted on and funded. Nobody will ever vote to pay for anything, hence the need for set funding coming from various forms of taxes. Also, you and nobody else gets to choose how me or someone else decides to use our land. As others have pointed out, your friend wasn't making offers the sellers cared to accept. That empty piece of land is probably used to depreciate other assets off their books, so is serving the owners a purpose.
Duke said:
SV reX said:
In reply to pheller :
The sellers have made it clear they want to make money. He can't make a deal with them because he isn't offering enough...
...because he wants room to make more money himself.
Yeah but people shouldn't be allowed to make money.
Some rare good news relevant to this thread, just ran across an article mentioning that average home prices in Canada have fallen over 18% since last January, a great start:
https://www.cbc.ca/news/business/crea-january-1.6748986
This happened after a mortgage rate increase, again suggesting that a major factor is the "it costs whatever you can finance" effect, like student loans or more recently, new pickup trucks.
In reply to GameboyRMH :
People shop for the payment, not the home price. The payments are remaining the same. Since money is more expensive the house has to be less expensive.
The good news is those evil banks are making more. 
SV reX
MegaDork
2/15/23 2:08 p.m.
In reply to GameboyRMH :
You and I sure read stuff differently...
That article is completely negative (including a headline that says "Worst January for home sales since 2009 "), but you present it as good news.
The national average home sale price is $612,204 (DOUBLE US average price), sales are down 37% in one year, and interest rates have doubled (in a country where 30 year mortgages are hardly even available). That's good news?
Serious first world problems.
dyintorace said:
After reading this article in the WSJ, I thought of this thread. It will be interesting to see if this passes in Detroit.
https://www.wsj.com/articles/detroit-aims-to-spur-new-housing-boost-property-values-with-tax-change-5e81cbcc?st=qpcqoyttlg3brb5&reflink=desktopwebshare_permalink
"Change" invariably punishes those that dared to make thoughtful plans.
I live in California where we have Proposition 13 which sets property tax at 1% of a home's sale price and limits its annual increase to 2% per year.
Edit - they keep sneaking in more and more "special assessments" so it's really about 2.5% at least where I live.
My home was originally purchased by my grandparents in 1979 and I was able to acquire their tax base when they passed away so I'm paying $3,800 per year rather than about $14,500 if the property were reassessed today.
When my dad passes away I'll inherit two homes and the combined property tax should be $11,100 but thanks to stupid, stupid California voters that approved Proposition 19 in February of 2021, they'll now explode to $32,200.
If I move into my dad's house, the tax will be about the same on that house as they take one million off of the assessed value but I don't want to live in the house as it's too big and fancy for what I need...I'd much rather rent it out but now I can't without taking a massive tax hit.
I'm expecting a tsunami of criticism for complaining about getting two houses. Fine, get it out of your systems...all done, good, now back to my point...change invariably punishes those that dared to make thoughtful plans.
My dad's rental is my last house, we dared to understand the tax code and think everything through carefully and that's very much not OK in California.
SV reX said:
In reply to GameboyRMH :
You and I sure read stuff differently...
That article is completely negative (including a headline that says "Worst January for home sales since 2009 "), but you present it as good news.
The national average home sale price is $612,204 (DOUBLE US average price), sales are down 37% in one year, and interest rates have doubled (in a country where 30 year mortgages are hardly even available). That's good news?
Serious first world problems.
Let's break down each point:
- Worst January for home sales since 2009: Bad news for property developers and people selling houses, maybe bad news for desperate buyers at the moment, but beyond the short term it's good news for all buyers. This will apply downward pressure to home prices.
- National average home sales price is over $600k. Plainly bad in itself, but it's good that it's down almost 1/5th in just over a year.
- Sales down 37% in one year. Has the same pros and cons as the first point.
- Mortgate rates doubled. Good for banks, a net gain for buyers if it leads to a decrease in total mortgage costs, and since it's coupled with an 18% home price decrease there's plenty of room for gains.
- First world problems? I've consulted the definitive categorization tool, Weird Al's music video, and whole generations of working adults struggling to afford housing doesn't seem to fit, it sounds like what would traditionally have been considered a distinctly un-first-worldish problem to me in fact. Living in the first world used to mean working adults affording housing fairly easily. If your wifi doesn't reach the kitchen because your house is so big on the other hand...
In reply to RX Reven' :
I don't think your mantra about change and plans is axiomatically correct, it may be more of a rough rule of thumb...as someone who makes very long-term plans I don't feel like changes to legislation are universally harmful or a particularly common source of harm. As I mentioned earlier in this thread, I once benefitted from a change to a vehicle road tax system that saved me a lot of money as a multiple vehicle owner who doesn't drive a lot of miles. It put more of the tax burden on people who drive a lot of miles and don't have idle second vehicles and I wasn't happy with it, but it did save me money. I was planning to have to pay more in road tax and I didn't.
Also, if I understand correctly, Prop. 19 is effectively encouraging you to sell the house rather than rent it out or mothball it, which could be seen as a positive to most California voters who own somewhere between 0 and 1 homes.
In reply to GameboyRMH :
Let's break down each point:
- Worst January for home sales since 2009: Bad news for property developers and people selling houses, maybe bad news for desperate buyers at the moment, but beyond the short term it's good news for all buyers. This will apply downward pressure to home prices.
You are assuming that this will make homes more affordable for more people. But that's not how it works. One, new home construction will slow or stop as prices drop, reducing supply. Two, investors that would have sold will now rent them out until prices go back up. While drops in the market are usually a good time for a current homeowner to move up in house, higher interest rates negate that. Which means they will stay in their entry level home for longer. Even less supply. Three, a greater percentage of homes sold will be to investors, who buy during the low periods.
- National average home sales price is over $600k. Plainly bad in itself, but it's good that it's down almost 1/5th in just over a year.
- Sales down 37% in one year. Has the same pros and cons as the first point.
- Mortgate rates doubled. Good for banks, a net gain for buyers if it leads to a decrease in total mortgage costs, and since it's coupled with an 18% home price decrease there's plenty of room for gains.
Check your math with one of the numerous mortgage calculators online. The interest rate increase has more than offset the principal decrease. Home buyers are paying more per month and getting less equity in return.
- First world problems? I've consulted the definitive categorization tool, Weird Al's music video, and whole generations of working adults struggling to afford housing doesn't seem to fit, it sounds like what would traditionally have been considered a distinctly un-first-worldish problem to me in fact. Living in the first world used to mean working adults affording housing fairly easily. If your wifi doesn't reach the kitchen because your house is so big on the other hand...
Much like a music video, this is largely fiction. A narrative pushed by those who expect others to do for them what they are unwilling to do for themselves, and by those that pander to them. Promise to "fix" it. But the fix never comes. Maybe next time. Most people don't struggle to own a home. Some struggle to budget and prioritize their spending. Some struggle because they want to buy a home in a place that they can't afford. Some struggle because the want a home larger than they can afford. All the above are in the control of the individual.
GameboyRMH said:
In reply to RX Reven' :
I don't think your mantra about change and plans is axiomatically correct, it may be more of a rough rule of thumb...as someone who makes very long-term plans I don't feel like changes to legislation are universally harmful or a particularly common source of harm. As I mentioned earlier in this thread, I once benefitted from a change to a vehicle road tax system that saved me a lot of money as a multiple vehicle owner who doesn't drive a lot of miles. It put more of the tax burden on people who drive a lot of miles and don't have idle second vehicles and I wasn't happy with it, but it did save me money. I was planning to have to pay more in road tax and I didn't.
Also, if I understand correctly, Prop. 19 is effectively encouraging you to sell the house rather than rent it out or mothball it, which could be seen as a positive to most California voters who own somewhere between 0 and 1 homes.
Agreed, it's a tendency rather than an inevitability. Basic physics, entropy, the tendency to move towards lower states of order over time...the more organized something is, in this case making life decisions based on a good understanding of the tax code, the more likely it is to be harmed by change, entropy.
Succession planning played a significant role in my dad's decision to buy my last house in 2010. If not for the property tax advantage other investments, on the whole, would have been better and now the brilliant voters of California have stripped that away.
To your point about it being a positive for others...the state equivalent of the CBO scored Proposition 19 and calculated that it would bring billions of extra tax dollars into the state coffers so no, we collectively walked straight into the slaughter house; you know, for the kids.
Edit for clarification - The people that own zero houses (renters) will be paying 100% of the increased property taxes or they'll find a decrease in the availability of rental properties as capital moves to other investment opportunities which, of course, will drive rents up. First time buyers will benefit in the short term due to increased supply / decreased value but most homeowners have kids and they'll be getting screwed later just like I am now.
SV reX
MegaDork
2/15/23 6:02 p.m.
In reply to GameboyRMH :
Canada currently has a housing shortage of over 3.5 million houses. They won't become affordable until they build that many.
If a 37% drop in sales equals a similar drop in new home starts (which is likely), it represents over 23,000 houses that didn't get built. That would be a loss of over $14billion in GDP.
Im sure you are happy sticking it to the big bad developers, but how about the millions of people who depend on those houses getting built for their livelihoods?? How the hell are they ever gonna buy a house? And how will Canada ever bring down house prices if they need 3.5 million new ones, but fall short of the previous year by 23,000 units?
Its fun to blame the developers. Tough luck for the carpenters, painters, electricians, building supply workers, truck drivers, real estate agents, landscapers, etc. And tough luck for the communities that need the tax base for those buildings that were never built.
A 37% drop in productivity is NEVER good for an economy, nor for the citizens.
Boost_Crazy said:
Check your math with one of the numerous mortgage calculators online. The interest rate increase has more than offset the principal decrease. Home buyers are paying more per month and getting less equity in return.
Using the Canadian government's own mortgage calculator, I compared a house at $612k @5.05% over 25 years with a $25k downpayment to represent today - this came out to $1.015M total. Then I changed the price to $722,160 and the rate to 3.59% to represent the same house in early 2022, this came out to a total of $1.057M (that little decimal change is about the cost of a new mid-range sports car!) and the payments were about $80/mo more - so it's still a savings for buyers even if a depressingly small one. The buyer may end up with a house that's worth less, but the less interest the buyer has in house-flipping the smaller of a problem that is.
Boost_Crazy said:
Much like a music video, this is largely fiction. A narrative pushed by those who expect others to do for them what they are unwilling to do for themselves, and by those that pander to them. Promise to "fix" it. But the fix never comes. Maybe next time. Most people don't struggle to own a home. Some struggle to budget and prioritize their spending. Some struggle because they want to buy a home in a place that they can't afford. Some struggle because the want a home larger than they can afford. All the above are in the control of the individual.
The data says it's a real problem:
https://www.ipsos.com/sites/default/files/migrations/en-uk/files/Assets/Docs/Polls/generations-and-housing.pdf
And that no amount of budgeting or downsizing or avocado toast abstaining are going to close a modern income to home cost gap:
SV reX
MegaDork
2/15/23 6:36 p.m.
In reply to GameboyRMH :
As far as I can tell, there are no 25 year mortgages currently available in Canada at 5.05%. That's the rate for a 5 year mortgage. (How in the heck can anybody pay back a $600K note in 5 years??)
The current rate for a 25 year mortgage in Canada appears to be well over 8%. That's a MAJOR loss for buyers.
SV reX
MegaDork
2/15/23 6:40 p.m.
In reply to GameboyRMH :
You mean the "data" from The Guardian? You really should consider your sources, and read a couple that don't support your political biases.
SV reX said:
In reply to GameboyRMH :
You mean the data from The Guardian? You really should consider your sources, and read a couple that don't support your political biases.
The data isn't from the Guardian but for it, by Ipsos. The Guardian's also excellent on factual accuracy from my experience (spelling, not so much...).
SV reX
MegaDork
2/15/23 6:53 p.m.
In reply to GameboyRMH :
So, you don't think "for it" creates any bias? Doesn't that mean they paid for the info?
SV reX
MegaDork
2/15/23 6:56 p.m.
In reply to GameboyRMH :
If a study was done "for" The Guardian which didn't support their political perspective, do you think they would publish it?
SV reX
MegaDork
2/15/23 7:04 p.m.
This is a really stupid graph.
How about comparing the income to home cost ratios when boomers were in their 30's??
The only thing that graph proves to me is that 1-millennials are choosing to buy more house than they can afford (just like their predecessors), and 2- Everybody's income to house price ratio is bad when they are young, and gets better as they get older.
Sounds pretty normal to me.
