The real estate market is crazy right now

[Chick Webb]

Originally Posted by dscabra

Our cycle is two years. My last increase was 23% and it's likely I'll see another double-digit increase next cycle.

That's the sort of thing that caused the California taxpayers to revolt in the '70's. The papers were full of stories about little old ladies eating cat food and losing their homes to property tax delinquency because taxes had risen beyond their means. The result was Prop 13, which set the assessed value at the time of transfer, limited yearly increases to 2%, and set the max rate at 1% + local adds that have to be approved by 57% majorities. Plus, of course, various "fees" that counties/cities tack on.

My house currently has 5 local adds - all school bonds - totaling 0.089581%, for a rate of 1.089581%. Which isn't bad, but considering the value of homes here, still adds up to well more than the SALT deduction allowed by the 2017 tax law changes. Like, double. And don't forget that the majority of CA residents pay roughly 9% state tax, and the top rate is 12.3%. So, they get their pound of flesh, for sure.

Information here on tax limitation regimes by state - https://taxfoundation.org/property-t...egimes-primer/

[Alfisti]

I will never, ever, ever understand the US philosophy of low income taxes and absolutely CRIMINAL property tax. Talk about arse backwards.

[RickFLM4]

Originally Posted by dscabra

I wish! Here is what my property tax history looks like. Again, the assessments are completed every two years, so we get a reprieve from an annual increase, but get hit with some hefty increases in this crazy market.

Attachment 2821276

Bit different here. Property taxes are designed to be more stable so people who have been in their homes for years aren't forced to sell because they can't afford the property tax bill as the property value increases (think retirees). Property taxes reset upon sale and it only applies to primary residences. No relief for New Yorkers and Canadians buying second homes here or people who like / need to buy, sell and move frequently.

[RickFLM4]

Originally Posted by Alfisti

I will never, ever, ever understand the US philosophy of low income taxes and absolutely CRIMINAL property tax. Talk about arse backwards.

Property taxes are at the state level. Not all states have income taxes, while some states have very high state income taxes AND high property taxes. Federal taxes income not property (other than upon death when an estate tax applies to some). I'd prefer even lower federal income taxes since so much of that money gets pissed away IMO. I don't think our property taxes in FL are bad at all and they fund services where we live. Makes perfect sense to me.

[dscabra]

Originally Posted by RickFLM4

Bit different here. Property taxes are designed to be more stable so people who have been in their homes for years aren't forced to sell because they can't afford the property tax bill as the property value increases (think retirees). Property taxes reset upon sale and it only applies to primary residences. No relief for New Yorkers and Canadians buying second homes here or people who like / need to buy, sell and move frequently.

I'm envious. Don't even ask about personal property tax on a new car! My 4-year old M550i cost me over $700 to renew my plates this year. Most of that, $655.01, was "Ownership Tax". Ownership tax is ridiculous the first three years, then starts to drop until it gets capped at $3.00 when the car is 10 years or more old. I used to live in Florida and miss the low-tax and cheap car registration bills.

[zx10guy]

Originally Posted by RickFLM4

Bit different here. Property taxes are designed to be more stable so people who have been in their homes for years aren't forced to sell because they can't afford the property tax bill as the property value increases (think retirees). Property taxes reset upon sale and it only applies to primary residences. No relief for New Yorkers and Canadians buying second homes here or people who like / need to buy, sell and move frequently.

Originally Posted by RickFLM4

Property taxes are at the state level. Not all states have income taxes, while some states have very high state income taxes AND high property taxes. Federal taxes income not property (other than upon death when an estate tax applies to some). I'd prefer even lower federal income taxes since so much of that money gets pissed away IMO. I don't think our property taxes in FL are bad at all and they fund services where we live. Makes perfect sense to me.

My Delaware property taxes are about $900 a year which is my second home. I don't know how the income taxes are there, but no sales tax is a great perk this includes no taxes are restaurants. Gas is pricier out there though. Purchasing a car is 4.5% for taxes.

[Alfisti]

Originally Posted by RickFLM4

Property taxes are at the state level. Not all states have income taxes

Now you're just piling more lunacy on top of lunacy. Feds should do income taxes, states shouldn't be allowed to charge them imho, i like a centralised system but i know you guys get all 2nd amendment when i go that route.

[Chick Webb]

Originally Posted by Alfisti

I will never, ever, ever understand the US philosophy of low income taxes and absolutely CRIMINAL property tax. Talk about arse backwards.

Taxes in America are much more progressive than in most places. Heck, 55-60% of the people in this country pay no federal income tax at all. In 2017 the top 10% of earners paid over 70% of all the federal taxes collected by the government. The bottom 50% paid only 3% of the total.

That extends to many states as well; in CA if you make just under $49k/yr you pay 6.0%, while if you make just over $61k you pay 9.3%, which is 55% higher. Those are marginal rates, of course, but you get my point.

On items where taxes are regressive - food, fuel, etc. - they often get eliminated altogether. Unprepared food, diapers, baby formula, pedialyte, and prescriptions are all exempt from sales tax in CA, for example.

Bottom line - It sucks being poor, but in America at least you don't pay much in taxes for the privilege.

But, yes, it's backwards from, say, Europe, where pretty much every earner pays some income taxes, in exchange for a broader social safety net. Diff'nt strokes fo' diffn't folks, as they say.

[RickFLM4]

Originally Posted by Alfisti

Now you're just piling more lunacy on top of lunacy. Feds should do income taxes, states shouldn't be allowed to charge them imho, i like a centralised system but i know you guys get all 2nd amendment when i go that route.

Provinces have no income tax on top of federal taxes?

Florida is one of the states that don't have a personal income tax.

[chassis]

Originally Posted by x3sm

What exactly will crash the Real Estate market? I'm in the business and people are paying cash with offers of 50k over asking. The amount of equity people have right now is next level. The inventory is extremely short, like nothing we have ever seen before. Builders hands are tied, too much to go through to build a house nowadays and thus most of them build homes worth 500K (my area) and up, anything under is not worth it to them. Rates went from 2.5% to 3.75% overnight and buyers are still going strong and offering over asking all day long. Inflation hasn't even touched RE markets, it's just supply and demand right now. Owning property will be for the rich soon. All young people want to rent and Airbnb because they work from home and just travel. My advice is to buy 2-4 family units.

+1 this.

[premier3is]

People have been talking about a crash for what now? 10 years +?

No one can predict it, good luck trying though, don't care what charts anyone shows me either.

[premier3is]

Originally Posted by Alfisti

Here's my neighbourhood in the last yr, the fluctuation you see is because it is an old area with 2 bed knock downs and newly build 5 bedders so it hops about a bit.

Avg 10 years ago was $561K.

Nuts… mines is similar as well. Chart posted looks like we are at 1.4m average. Literally almost doubled in the last year though.

[Joe T]

Originally Posted by premier3is

Nuts… mines is similar as well. Chart posted looks like we are at 1.4m average. Literally almost doubled in the last year though.

I don't know how you Californians do it. We live in CT, where it's also expensive to live. My wife just interviewed for a job in Irvine, to get a single family home, not as nice as ours, with practically no land is $3+ million

The job pays about 25% more (on an already healthy East Coast salary) but homes are 3-4X the cost

strangely enough, the property tax on a $3mm california home and ours is about the same (we're about $22k a year on a home that's realistically $850K)

[premier3is]

Originally Posted by Joe T

I don't know how you Californians do it. We live in CT, where it's also expensive to live. My wife just interviewed for a job in Irvine, to get a single family home, not as nice as ours, with practically no land is $3+ million

The job pays about 25% more (on an already healthy East Coast salary) but homes are 3-4X the cost

strangely enough, the property tax on a $3mm california home and ours is about the same (we're about $22k a year on a home that's realistically $850K)

Basically survival of the fittest out here in California to be honest. I live about an hour south of Irvine, that's where my office is and I'd drive down every once in a while if needed since I've been working from home for many years now (thank God because the drive back and forth was brutal when I started).

Great city, high end shopping if that's your taste and great dining around as well. As you said, it is around an area where there is a lot of wealth, like Newport Coast where the median home price is over 6m+. 25% salary increase is great just make sure your combined incomes will let you live a stress free life here. Any questions feel free to ask, like I said I'm very familiar with Irvine. Wish you and your wife the best in your upcoming decisions.

[XutvJet]

Originally Posted by Joe T

I don't know how you Californians do it. We live in CT, where it's also expensive to live. My wife just interviewed for a job in Irvine, to get a single family home, not as nice as ours, with practically no land is $3+ million

The job pays about 25% more (on an already healthy East Coast salary) but homes are 3-4X the cost

strangely enough, the property tax on a $3mm california home and ours is about the same (we're about $22k a year on a home that's realistically $850K)

How do many of them do it? 50 year mortgages. Que the horror music.

[Joe T]

Originally Posted by premier3is

Basically survival of the fittest out here in California to be honest. I live about an hour south of Irvine, that's where my office is and I'd drive down every once in a while if needed since I've been working from home for many years now (thank God because the drive back and forth was brutal when I started).

Great city, high end shopping if that's your taste and great dining around as well. As you said, it is around an area where there is a lot of wealth, like Newport Coast where the median home price is over 6m+. 25% salary increase is great just make sure your combined incomes will let you live a stress free life here. Any questions feel free to ask, like I said I'm very familiar with Irvine. Wish you and your wife the best in your upcoming decisions.

cost of living is a "no go"... my company will transfer me to CA if I asked, but there's no increase in my income in the move. 25% of hers doesn't hit the delta to make sense.

[premier3is]

Originally Posted by XutvJet

How do many of them do it? 50 year mortgages. Que the horror music.

wish I knew! I purchased the home I'm in last year in January of 2021 at a 2.62% 30yr loan, putting down 25%. I was lucky to get it to say the least. It has risen over 225k from January 2021- today. Just an absurd amount, I get letters from the bank every few weeks asking if I'd like to take out a home equity line.

While I agree everything is insanely high valued right now, I don't see it ending anytime soon due to more people working from home now and the excessively high demand for homes. Supply and demand, basic economics.

[RickFLM4]

Originally Posted by Joe T

I don't know how you Californians do it. We live in CT, where it's also expensive to live. My wife just interviewed for a job in Irvine, to get a single family home, not as nice as ours, with practically no land is $3+ million

The job pays about 25% more (on an already healthy East Coast salary) but homes are 3-4X the cost

strangely enough, the property tax on a $3mm california home and ours is about the same (we're about $22k a year on a home that's realistically $850K)

$22K property tax on an $850K home?

[Donatello.]

Originally Posted by ToddBlack88

Ok, just an addition to this and how absolutely screwed, the younger generation is with regards to the real estate market here in Vancouver.

Two of my neighbours put there houses up for sale 10 days ago.

One was pretty 1980s inside, 2200 sq/ft, 65x125’ lot, and was on the market last summer for 1.7 million. It didn’t sell after 2 months and was pulled off the market. It was listed this time for the same amount(1.7 million) and sold in 6 days for 2.3 million.

The other was a very well maintained and beautifully upgraded home that was about 2300 sq/ft on a larger 65’x140’. It was listed for 2.08 million and sold in 8 days for………………2.7 million!

Wtf!

This is a middle class neighborhood! I cannot imagine what income one must have to afford to enter this market. For information, these houses were 24k new in 1967 when they were built.

My son has no chance of buying a home in his hometown without a miracle.

7 figure income is middle class? Nope.

[dreamingat30fps]

Originally Posted by premier3is

While I agree everything is insanely high valued right now, I don't see it ending anytime soon due to more people working from home now and the excessively high demand for homes. Supply and demand, basic economics.

I don’t understand this though… where did the work from home people live before they all became wfh??? I could understand people relocating to other areas, but I don’t see why the demand for housing would be any different. Also it seems prices are going up everywhere. It would make more sense if prices were dropping in areas people are moving out of and going up in areas people are moving into, but seems it’s all going up.

Also where is all the $$ coming from? How can these people now afford homes that are double or more what they were a couple of years ago? Along with affording the inflated prices for everything else? Is a side effect of catching the rona that your income automatically doubles??

[b4hand]

Originally Posted by dreamingat30fps

Also where is all the $$ coming from? How can these people now afford homes that are double or more what they were a couple of years ago? Along with affording the inflated prices for everything else? Is a side effect of catching the rona that your income automatically doubles??

This is my question. Housing almost doubled here in Austin, I got a 3.5% raise, aka a pay cut. How am I supposed to afford a home when a basic home is over 500k here

[ToddBlack88]

Originally Posted by Donatello.

7 figure income is middle class? Nope.

Exactly.
But it’s a middle class home. It was 300k in 2001. I bought it in 2005 for 600k. It’s assessed for taxes at 2.2mil today, with market value at 2.5-2.8mil.

Apartments are well over a million here. It’s crazy