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Message
re: Home Prices start to drop due to rates, lack of sells, and more inventory!
Posted on 4/25/25 at 10:57 am to Sus-Scrofa
Posted on 4/25/25 at 10:57 am to Sus-Scrofa
quote:
Make mortgage payments tax deductible
So, basically make buying houses a money laundering operation?
1. Make money
2. Use that money to make mortgage payments
3. Sell house with no tax consequences
4. GO TO 1
Putting it in different terms: Interest (tax deductible) is an expense. Principal is a balance sheet transfer. You just made moving cash into a house a way to avoid paying taxes on how you generated that cash.
1
Posted on 4/25/25 at 11:44 am to NC_Tigah
So basically what I read above is you disagree. You could've just "nu uh". But I'll try a couple of points
Where? I said the increase in home prices is inflation and it is. I said purchasing a home is not an investment because it isn't, it's buying shelter, along with comfort, etc. I said the fact that people buy homes as an "investment" doesn't actually make it an investment; to the extent they purchase their home for price appreciation, it's speculation on future inflation, or intended as an inflation hedge. I said adding leverage to speculation increases risk, both downside and upside.
No.
The Fed's inflation target is meaningless if they run contrary policy. If you don't understand that monetary policy is the genesis of general price inflation, I'm not sure how much I can help. If you don't understand that loose monetary policy enabled and incentivized deficit spending and overconsumption, and discouraged saving and investment, it's unlikely you'll understand what's coming.
Many people have debated the difference between speculation and investment. Some focus on the level of risk involved, or the time frame, etc. Those aren't useful distinctions because there's no agreement on how they apply to specific examples. For me, the distinction is much easier and more clear than that.
1) Speculation is betting on a price change of an asset or asset derivative. As such, speculation is a zero sum game, buyers and sellers offset; one benefits from the higher price received while the other suffers from the higher price paid. Their transaction doesn't change the overall level of capital or production.
2) Investment uses capital to create more capital or add value to existing capital. Investment can produce a positive net gain in wealth for the entire economy, not just an individual. That's how an economy grows in real terms. Investment is not a zero sum game.
Too late. I started studying these things 45 years ago. I've studied them from every possible angle. I'm okay with disagreement though, we've all had a different path to get here.
quote:
You've been all over the place on inflation vs inflation hedges
Where? I said the increase in home prices is inflation and it is. I said purchasing a home is not an investment because it isn't, it's buying shelter, along with comfort, etc. I said the fact that people buy homes as an "investment" doesn't actually make it an investment; to the extent they purchase their home for price appreciation, it's speculation on future inflation, or intended as an inflation hedge. I said adding leverage to speculation increases risk, both downside and upside.
quote:
You're confusing terminology
No.
quote:
Fed policy, speculation. E.g., now you're conflating the Fed hurting Americans with inflation. The Fed inflation target is very low. That drives Fed policy and protects the very folks you're intimating are getting hosed with inflation.
The Fed's inflation target is meaningless if they run contrary policy. If you don't understand that monetary policy is the genesis of general price inflation, I'm not sure how much I can help. If you don't understand that loose monetary policy enabled and incentivized deficit spending and overconsumption, and discouraged saving and investment, it's unlikely you'll understand what's coming.
quote:
again, you're confusing terminology, or you simply don't understand what speculation is.
Many people have debated the difference between speculation and investment. Some focus on the level of risk involved, or the time frame, etc. Those aren't useful distinctions because there's no agreement on how they apply to specific examples. For me, the distinction is much easier and more clear than that.
1) Speculation is betting on a price change of an asset or asset derivative. As such, speculation is a zero sum game, buyers and sellers offset; one benefits from the higher price received while the other suffers from the higher price paid. Their transaction doesn't change the overall level of capital or production.
2) Investment uses capital to create more capital or add value to existing capital. Investment can produce a positive net gain in wealth for the entire economy, not just an individual. That's how an economy grows in real terms. Investment is not a zero sum game.
quote:
You need to step back and start over. Start with basics such as what drives Fed policy, or the delineation between speculation and investment.
Too late. I started studying these things 45 years ago. I've studied them from every possible angle. I'm okay with disagreement though, we've all had a different path to get here.
This post was edited on 4/25/25 at 12:43 pm
Posted on 4/25/25 at 11:47 am to Ag Zwin
quote:Like munis?
So, basically make buying houses a money laundering operation?
Government definitely picks and chooses winners thru tax policy. Insofar as that invariably increases purchase cost, there's little debate. Mortgage principal deduction could further serve to disadvantage renters who are locked out of an overpriced market.
Of the tax-related aspects of home ownership currently in place though, one which is absurd is the $500K/2yr profit deductibility. That's a benefit targeting folks with multiple upper end residences (like DC congressmen). Obviously those of us who can take advantage, will. But IMO, $500K over a lifetime would be more than sufficient to attend 90%+ of home sale profits.
Posted on 4/25/25 at 12:35 pm to wdhalgren
quote:Then you said it's an inflation hedge. You're all over the place.
Where? I said the increase in home prices is inflation and it is.
quote:By that token, the fact that people buy TSLA at $400 as an "investment" doesn't actually make it an investment either. E.g., Are REIT's with long term positive performance histories an investment?
the fact that people buy homes as an "investment" doesn't actually make it an investment
quote:Goodness
The Fed's inflation target is meaningless if they run contrary policy
quote:Those are incredibly silly hypos, much less syllogistic applications.
If you don't understand that monetary policy is the genesis of price inflation, I'm not sure how much I can help. If you don't understand that loose monetary policy enabled and incentivized deficit spending and overconsumption, and discouraged saving and investment, it's unlikely you'll understand what's coming.
Rather than have you speculate, I'll clear up my POV for you.
Government debt and deficits which are run under the auspices of helping the needy, spreading the wealth around, etc. will prove the bain of the very folks the government is claiming to help. Currently, the sole factor shielding those folks is Fed Manipulation to suppress inflation. We're only a couple of failed bond auctions away from fiscal dominance.
At that point, Fed suppression of inflation will disintegrate. Fungible money will take care of itself. Americans on fixed income would be absolutely hosed though. SS works off of a similar premise. Nothing is so expensive as that which the government offers for free.
quote:So if Mar-a-lago had been offered at the naked judge's assessment of $18M, would a purchase of that property at that price constitute "speculation"? How about $1.8M? $180K? $1.80?
Speculation is betting on a price change of an asset or asset derivative.
As I said, you simply don't know what speculation is.
Posted on 4/25/25 at 12:47 pm to NC_Tigah
quote:
Then you said it's an inflation hedge. You're all over the place.
No. I said housing price appreciation is inflation. I said a house can serve as an inflation hedge.
quote:
By that token, the fact that people buy TSLA at $400 as an "investment" doesn't actually make it an investment either.
Correct. People buying shares of TSLA stock on the secondary market is speculation. It does not change the level of production or the the stock of capital in Tesla corporation. All that happens is an existing asset derivative and money change hands. The investment was made when someone deployed capital to create the company. If the company itself did a share offering to raise new capital, that would be an opportunity for new investment in Tesla corp. The company could use those proceeds to expand operations, modify capital structure in an attempt to reduce costs, conduct R&D, etc.
quote:
Goodness
I assume that means you disagree. Noted.
quote:
So if Mar-a-lago had been offered at the naked judge's assessment of $18M, would a purchase of that property at that price constitute "speculation"? How about $1.8M? $180K? $1.80?
As I said, you simply don't know what speculation is.
I told you what speculation is. As I said, it's a term that has been defined many different ways, so I use a definition I believe fits best to define it and distinguish it from investment. What's your definition?
As for your detailed POV, I don't disagree with some of that. It lacks an explanation for how our govt and private sector were able to get so deeply in debt, which crucially involves Federal Reserve policy dating back decades. Otherwise, the bond market would've had its day long ago.
And the Federal Reserve hasn't been suppressing inflation, they've been causing it for the last 100 years by increasing (or allowing banks to increase) the money supply too fast. Occasionally they make a show of raising rates to slow it down, but never enough to stop the inflation in asset prices, like stocks or houses. Never enough to threaten the rapidly growing volume of debt. Their attempts have gotten weaker over time, with lower interest rate peaks at every cycle. They've done that for so long that they're losing the ability to control inflation by adjusting short term rates. They compromised their own balance sheet.
This post was edited on 4/25/25 at 4:20 pm
Posted on 4/25/25 at 1:13 pm to BCreed1
I live in Indian River County, FL. I bought my house in January of 2022 and their were 330 houses on the market in Indian River County. 330.
Today, there are 3,800 on the market in Indian River.
Fortunately, I sold my house in September, and we've been renting ever since. I had the money in an interest bearing account for 6 months while we've looked for a house, and a couple of weeks ago, I put the majority of it into the market to ride the rebound. We're deliberately stalling while we look for a deal.
Prices are not going down much, but inventory is skyrocketing as houses are not selling. I believe people are hoping that a buyer eventually comes forward, but I think prices are going to have to come down.
In Indian River County, there are a lot of seniors, and a lot of houses go on the market after someone passes away. The families are left to sell it, and sometimes they just need to get the place sold.
Today, there are 3,800 on the market in Indian River.
Fortunately, I sold my house in September, and we've been renting ever since. I had the money in an interest bearing account for 6 months while we've looked for a house, and a couple of weeks ago, I put the majority of it into the market to ride the rebound. We're deliberately stalling while we look for a deal.
Prices are not going down much, but inventory is skyrocketing as houses are not selling. I believe people are hoping that a buyer eventually comes forward, but I think prices are going to have to come down.
In Indian River County, there are a lot of seniors, and a lot of houses go on the market after someone passes away. The families are left to sell it, and sometimes they just need to get the place sold.
This post was edited on 4/25/25 at 1:16 pm
Posted on 4/25/25 at 5:15 pm to Jax-Tiger
quote:Smart
I had the money in an interest bearing account for 6 months while we've looked for a house, and a couple of weeks ago, I put the majority of it into the market to ride the rebound. We're deliberately stalling while we look for a deal.
quote:Sounds like they will, but it will take places sitting for a while.
Prices are not going down much
Posted on 4/25/25 at 7:11 pm to oklahogjr
Anyone who bought houses at inflated prices merely for investment purposes ...are pretty dumb. Nearly everyone and their mother knew those prices would eventually come down.
Posted on 4/25/25 at 7:52 pm to Plx1776
Home sales last month were at a 6 month high, up 7.4% on a tiny dip in rates.
Rates get back in the 5’s housing is going to go bananas again.
Rates get back in the 5’s housing is going to go bananas again.
Posted on 4/25/25 at 7:56 pm to goldennugget
quote:
Those boomers
I know a hell of a lot of boomers.....I don't know a single dem in the group. Maybe I run with good people.
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