Comments on: Fix Real Estate, the Economy will Follow http://up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/ Your Home Is Our Business Fri, 03 Feb 2012 10:35:45 +0000 hourly 1 By: Tax Guru http://up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/comment-page-1/#comment-12537 Tax Guru Mon, 23 Nov 2009 03:53:21 +0000 http://www.up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/#comment-12537 I've been active in taxes for longer then I care to acknowledge, both on the individual side (all my working life!!) and from a legal viewpoint since passing the bar and following tax law. I've provided a lot of advice and righted a lot of wrongs, and I must say that what you've posted makes perfect sense. Please carry on the good work - the more individuals know the better they'll be equipped to comprehend with the tax man, and that's what it's all about. I’ve been active in taxes for longer then I care to acknowledge, both on the individual side (all my working life!!) and from a legal viewpoint since passing the bar and following tax law. I’ve provided a lot of advice and righted a lot of wrongs, and I must say that what you’ve posted makes perfect sense. Please carry on the good work – the more individuals know the better they’ll be equipped to comprehend with the tax man, and that’s what it’s all about.

]]> By: Doug Willis http://up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/comment-page-1/#comment-2579 Doug Willis Thu, 30 Oct 2008 16:21:02 +0000 http://www.up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/#comment-2579 Tony, I would draw a parallel with the stock market where people are seeing their retirement wealth evaporate just as many have in the housing market. Prices are very low, yet people have not bought back in due to ...uncertainty. So many people had home equity loans and now find themselves upside down. People priced out of housing markets has and always will be a fact of life. I would love to live in Malibu with an ocean view, however I find myself priced out of the market. There should be incentives for people to purchase and invest in real estate. Incentives that at one time were available. Tony,
I would draw a parallel with the stock market where people are seeing their retirement wealth evaporate just as many have in the housing market. Prices are very low, yet people have not bought back in due to …uncertainty. So many people had home equity loans and now find themselves upside down. People priced out of housing markets has and always will be a fact of life. I would love to live in Malibu with an ocean view, however I find myself priced out of the market.

There should be incentives for people to purchase and invest in real estate. Incentives that at one time were available.

]]> By: Tony Sena http://up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/comment-page-1/#comment-2574 Tony Sena Thu, 30 Oct 2008 05:32:33 +0000 http://www.up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/#comment-2574 "Many industries are dependent upon the economy created by a strong housing market and until the decline begins to stabilize, our economy will head into recession." What do you consider a strong housing market? If home prices continue to drop or even stabalize, more buyers can afford to enter the market and purchase a home which will stimulate other businesses that rely on homes being sold. I know in Vegas, home prices increased so fast, many people were priced out of the market and some purchased homes knowingly they couldn't afford the mortgage but they felt they had no choice. We needed this price correction, it's just unfortunate that it has caused a recession and so many people to lose their homes and dreams! “Many industries are dependent upon the economy created by a strong housing market and until the decline begins to stabilize, our economy will head into recession.”

What do you consider a strong housing market? If home prices continue to drop or even stabalize, more buyers can afford to enter the market and purchase a home which will stimulate other businesses that rely on homes being sold. I know in Vegas, home prices increased so fast, many people were priced out of the market and some purchased homes knowingly they couldn’t afford the mortgage but they felt they had no choice. We needed this price correction, it’s just unfortunate that it has caused a recession and so many people to lose their homes and dreams!

]]> By: Hannah B http://up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/comment-page-1/#comment-2470 Hannah B Thu, 23 Oct 2008 18:36:15 +0000 http://www.up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/#comment-2470 There's something to be said about the old business adage: change or die. Businesses have not always been dependent on unrealistic housing appreciation, although unfortunately they have grown accustomed to it. Businesses will evolve to new market dynamics. As a realtor, of course in your opinion falling home prices are bad economic policy. Whereas witnessing such a mass scale destruction of wealth is not necessarily good, the wealth gained was never based on sound economic principles to begin with. Lending standards will likely make a full correction to sound economic principles. Propping up unrealistic housing prices just will not mix with this, considering the LA County median income won't support the prices we have here, especially in cities like Pasadena. I don't think any of these tax incentives will be big enough to make any real difference. Whether anyone likes it or not, we are in the midst of a massive correction and nothing the government can do will stabilize it or avert a recession (assuming you don't believe we are in one regardless of what the NBER has not said). California alone is already at 7.7% unemployment, and the jobs picture only looks worse with or without housing aid. Not to mention the how many hundreds of billions in lost liquidity in the market due to all the bankruptcies and write-downs. I'd say fasten your seatbelts, the ride down will be big... but in the end I believe we'll be in a much more financial healthy and stable position. There’s something to be said about the old business adage: change or die. Businesses have not always been dependent on unrealistic housing appreciation, although unfortunately they have grown accustomed to it. Businesses will evolve to new market dynamics. As a realtor, of course in your opinion falling home prices are bad economic policy. Whereas witnessing such a mass scale destruction of wealth is not necessarily good, the wealth gained was never based on sound economic principles to begin with.

Lending standards will likely make a full correction to sound economic principles. Propping up unrealistic housing prices just will not mix with this, considering the LA County median income won’t support the prices we have here, especially in cities like Pasadena.

I don’t think any of these tax incentives will be big enough to make any real difference. Whether anyone likes it or not, we are in the midst of a massive correction and nothing the government can do will stabilize it or avert a recession (assuming you don’t believe we are in one regardless of what the NBER has not said). California alone is already at 7.7% unemployment, and the jobs picture only looks worse with or without housing aid. Not to mention the how many hundreds of billions in lost liquidity in the market due to all the bankruptcies and write-downs.

I’d say fasten your seatbelts, the ride down will be big… but in the end I believe we’ll be in a much more financial healthy and stable position.

]]> By: Doug Willis http://up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/comment-page-1/#comment-2352 Doug Willis Fri, 17 Oct 2008 22:17:43 +0000 http://www.up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/#comment-2352 I appreciate your comments, but will have to respectfully disagree. Falling home prices do not make for sound economic policy, no more than falling stock market’s. I do agree that home prices and affordability compared to incomes did get way out of line. That being said, California has some of the highest home prices in the nation, and I would disagree that falling home prices create economic incentives and new jobs. Creating economic incentives should be addressed with state government in a pro business, anti tax policy, neither of which is something the State of California subscribes to. Many industries are dependent upon the economy created by a strong housing market and until the decline begins to stabilize, our economy will head into recession. I appreciate your comments, but will have to respectfully disagree. Falling home prices do not make for sound economic policy, no more than falling stock market’s. I do agree that home prices and affordability compared to incomes did get way out of line. That being said, California has some of the highest home prices in the nation, and I would disagree that falling home prices create economic incentives and new jobs.

Creating economic incentives should be addressed with state government in a pro business, anti tax policy, neither of which is something the State of California subscribes to.

Many industries are dependent upon the economy created by a strong housing market and until the decline begins to stabilize, our economy will head into recession.

]]> By: Tim K. http://up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/comment-page-1/#comment-2345 Tim K. Fri, 17 Oct 2008 15:20:15 +0000 http://www.up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/#comment-2345 I'm not convinced the proper goal is to "stabilize homes prices". Home prices are much too expensive by historical standards any number of metrics; price per square foot, price relative to household income. Especially in Pasadena. The only way to truly stabilize home prices while not violating the past ratios of housing to income is to raise income. Otherwise, home prices have to go down. Your other proposals, while sounding quite fair in comparison to other investment vehicles as far as tax treatment goes, is arguably a different debate. Part of the reason we got into this economic mess was that we had *too much* investment in housing. Increasing incentives for people to invest in housing is not the right approach. Of course, it is only fair that I propose my solution, and that is to allow home prices to drop. Yes, it will be painful for the minority of people who recently bought homes since 2002, and everyone else will feel the economic impact of those peoples' collective misfortunes on consumer spending. But that level of spending and activity was never sustainable, and we have to come to the realization that we have to adjust our businesses and spending priorities that reality. Lower home prices are not all bad news! It also improves worker mobility. It helps Pasadena businesses attract workers who can actually afford lower cost housing, which in term stimulates the economy. A healthy economy is one where workers are not stretched to pay so much of their household income on housing, like they are now. Lower housing prices will hurt a few people in the short term, but it will help everyone else longer term, and that's *real* economic recovery that will last. So let home prices drop. It's the real economic reform we need, and it's happening already. I’m not convinced the proper goal is to “stabilize homes prices”. Home prices are much too expensive by historical standards any number of metrics; price per square foot, price relative to household income. Especially in Pasadena. The only way to truly stabilize home prices while not violating the past ratios of housing to income is to raise income. Otherwise, home prices have to go down.

Your other proposals, while sounding quite fair in comparison to other investment vehicles as far as tax treatment goes, is arguably a different debate. Part of the reason we got into this economic mess was that we had *too much* investment in housing. Increasing incentives for people to invest in housing is not the right approach.

Of course, it is only fair that I propose my solution, and that is to allow home prices to drop. Yes, it will be painful for the minority of people who recently bought homes since 2002, and everyone else will feel the economic impact of those peoples’ collective misfortunes on consumer spending. But that level of spending and activity was never sustainable, and we have to come to the realization that we have to adjust our businesses and spending priorities that reality.

Lower home prices are not all bad news! It also improves worker mobility. It helps Pasadena businesses attract workers who can actually afford lower cost housing, which in term stimulates the economy. A healthy economy is one where workers are not stretched to pay so much of their household income on housing, like they are now. Lower housing prices will hurt a few people in the short term, but it will help everyone else longer term, and that’s *real* economic recovery that will last. So let home prices drop. It’s the real economic reform we need, and it’s happening already.

]]> By: Ned Carey http://up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/comment-page-1/#comment-2332 Ned Carey Fri, 17 Oct 2008 04:26:57 +0000 http://www.up2daterealestate.com/2008/10/15/fix-real-estate-the-economy-will-follow/#comment-2332 I'll give you another one you didn't mention. You can't take losses on real estate if you earn over $150K. But according to SEC rules you can't invest in many ral estate "private placements" unless you are an "acredited investor" that earns over $250K a year. It doesn't leave many people who can actually take the losses other than very small investors. The give a tax benefit with one hand and take it away with the other. I’ll give you another one you didn’t mention. You can’t take losses on real estate if you earn over $150K. But according to SEC rules you can’t invest in many ral estate “private placements” unless you are an “acredited investor” that earns over $250K a year. It doesn’t leave many people who can actually take the losses other than very small investors.

The give a tax benefit with one hand and take it away with the other.

]]>