Irvine Housing Blog

The NAR is truly dense.  If they thought for three seconds rather than react, they would realize that as home prices decline both the supply and demand for homes increase.  On the supply side, the more underwater and defaulting homes that exist, the greater the number of homes that are listed for sale.  On the demand side, ... well you have to be a moron to not understand that more families can afford to buy as prices decrease.

On a strictly selfish scale, I am against cutting out the mortgage interest deduction. Why should the people that are still renting get screwed just as they want to buy a home?

Does anyone honestly think home prices will correct downward to account for the lost interest deduction?

The mortgage interest deduction has been used as an excuse for the high prices of residential property. It should end.

Folks got along perfectly fine in times past prior to this deduction: society will not collapse with its demise.

Further, if mortgage interest rates rise, then home prices will fall.

This is good for the buyer since property taxes would be calculated on the lowered property price.

Maybe this troubles the public entities, tax authorities, and those dependent upon a commish…*shrugs*

~Misstrial

When does AMT kick-in and nullify most of the mortgage interest deduction?  I am continually told that if you are a household (two wage earners) above $250K AMT tends to eliminate or drastically reduce this deduction anyway…

Any thoughts??

Thanks,

B

John Burns Real Estate Consulting said in a report Friday that government intervention is hurting the housing market.  John Burns is an idiot, if it weren’t for unprecedented government intervention…the housing market (in places like Irvine) would probably be 20% lower today.  Looks like the gimmicks have finally run out and reality is setting in.  All the those buyers from a year ago who had to have that 8K home buyer tax credit will soon all be upsidedown.  What a great time to be a renter.

Generally, homeowners are wealthy and Obama has always promised to tax rich people more and more. 
I don’t think a Walmart or Target employee can buy a house in California, it’ll be a big problem even for those who earn $60,000.

Also, the government helps homeowners from taxes, so homeowners must chip in.

1. CA already sends more to DC than it gets back (even counting for shared receipts like defense).
2. CA has 3.5M homes worth more than $500k (census.gov 2006-2008 survey, so it may be slightly off)
3. Say average is $750k, and half are fully mortgaged.
4. 1.75M*250k = $437.5B in mortgage under limit.
5. Say 5% blended rate = $20B in interest.
6. 25% tax rate -> $5B in net transfer from CA to DC.

I support lowering the amount that can be deducted, but wonder if right now is the best time to be pulling $5B out of California.  It’d be like Fannie/Freddie.  Sure they are causing market distortions, but they are also cushioning the market from a depression-esqe plunge.  We might be eventually better off without them being state controlled/backed, but is today the best time to start that experiment?

We see similar things in our real estate portfolio.  Most of it is smoke and mirrors.  It is like we are adults pretending not to know things that we actually know.

I am a cash buyer, I couldn’t care less.

2.5 car garage

SWEET!  Enough room for half a third car!  Don’t close the garage!

I always assumed the million dollar ceiling on mortgage interest deduction would never get indexed for inflation, so eventually, the deduction would disappear.  Looks like that scenario is taking too long.

It would be great if this actually happens. It will have very little impact on the average person. I mean, come on, are we really supposed to feel bad for those near the million dollar deduction point? I don’t really like the deduction for anybody, but this deduction was originally created to encourage home ownership. If you are buying a million dollar home, do you really need extra incentive?

The ironic part, it’s always the wealthy that cry “free market,” yet they’ll throw a fit if you got rid of this. The lesson we learn - gov’t incentives are fine, as long as they help me. If they help someone else, it’s a “handout.”

When I was renting, I was getting creamed on my income taxes as I’ve been a higher earner in California. I’ve had no shelter whatsoever.  I was getting absolutely destroyed every April. Still I trudged on, spent less, went without and tried my damnedest to save like a mother.

When I bought a house, I got the shaft again because home values where I live have fallen considerably since buying.  The income tax shelter, while substantial on paper, is not the main reason I bought a house.  The reason I bought was because of monthly affordability vs. total cost of ownership. So it’s not that I wouldn’t care that the interest deduction may disappear in the future. Honestly I would feel pretty ticked off, but it’s not like I organized my entire life and financial household budget around that tax shelter in the first place.  People who banked on this being there forever? Yeah, maybe they’ll be shitting bricks when their tax bill comes.

To me the really important thing is employment that comes with health insurance for my family and the ability to save.  You lose those things and you are really, truly and verifiably screwed.

I was pretty pissed off as a renter. And I find myself pretty pissed off about all that comes with being a home debtor too.  But I never considered myself a helpless boat adrift in the sea against the winds of government intervention

I mean, come on, the government makes dumb-ass tinkering moves every day of the year on the state and federal level to make up for ridiculous deficits and PAC favors, but the economy and taxpayers always adjust and respond - and usually quite swiftly.  If income taxes are going up and tax protections are being removed, the adjustment comes in the form of focused efforts to reduce costs/spending and increase net income.  This will have a major effect on the economy too.

Can we dispense with the talk about homes being hard to sell?  Homes are not hard to sell, even right now.  I was told by all my neighbors how difficult the market is in my neighborhood as we got ready to list, how most homes were on the market 4-6+ months and many still hadn’t sold.  How the summer busy season was over and there are no buyers out there.

I talked with my agent, we looked at where homes were selling (and not just where they were listed), and our home went into escrow, with a solid buyer, in 30 days.  We tracked most people who came to see our house, and most of them, even if they didn’t offer on ours, ended up offering on other homes and buying them.

It became quite obvious to us when we looked at homes getting offers and homes closing, that there was a liquid market, and that our home going relatively quickly was not surprising.

Maybe in some markets there are relatively few buyers.  But in my personal experience, there appears to be a good market for nice, fairly priced home.  Buyers are out there and ready.  They aren’t stupid though.

I wonder if/how this would affect cash flow investors that own multiple leveraged properties?

I sure hope Obama and Congress use common sense and lower the limit of the mortgage deduction. For God’s sake, please be smart about money and people’s livelihoods and stop this huge benefit for the upper and upper-middle classes to make more money off lower classes