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San Francisco Home Prices Fell for the First Time in Four Years in March

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Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#181

Post by beatpanda »

rconti wrote: post #171
andersen1488 wrote: post #162

Earlier quoted context omitted.

It's scary to think that in 20-30 years nearly the entire available housing stock will not be covered by rent control. My landlord wanted to raise my rent 40% in one year here in Oakland until I pointed out the laws. Eventually the entire middle class will just be landless peasants again, allowed to live wherever the rich say that they can.

It's only scary if you believe rent control is a net benefit.

No, facing a 40% increase in your rent without an attendant increase in your wages or salary is scary no matter what the macro situation is. Anybody working on or thinking about housing policy needs to keep this in mind -- no matter how right your policy prescriptions may be, you need to keep in mind that they may do massive harm to individuals in the short term. And the failure to even try to ameliorate those harms is one of the reasons why things like getting rid of rent control are politically impossible.

Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#182

Post by guelo »

lisper wrote: post #173
kspaans wrote: post #167

Earlier quoted context omitted.

"Penalty", yeah because people have put in sooo much hard work to make their house values go up. (Sure, some people will spend money on renovations, and there could be tax credits for that. But I don't think that sitting on an asset and letting it appreciate should be a free lunch.)

"Penalty" because someone who sells their house and buys a new one every time it appreciates $250k pays zero tax whereas someone who buys and holds pays significant tax despite having the same net gain over the same time period.

If someone actually tried to execute that sell and buy strategy the large transaction costs would eat up any possible tax savings.

Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#183

Post by throwaway6497 »

lisper wrote: post #161
gigawhat wrote: post #146

Weirdly, I own a house and think I'd be better off if prices fell-- fell a lot. I bought a few years ago and would be happy if prices uniformly dropped to those levels. Why? I want a 50% bigger/nicer house in the same area. But bigger/nicer houses have increased in price proportionally to mine. So the gap in absolute dollars between what I have and what I want has expanded quite a bit. My income has increased, but no…

It's even worse than that. If your house has appreciated more than $250k (or $500k if you're married) then you have to pay capital gains tax on the rest. And this is a fixed amount regardless of how long you've owned your home, so the longer you stay, and the more your house appreciates, the greater the penalty when you ultimately sell.

I am not a tax expert but I have heard that as long you put the appreciation money back into a house purchase, you can keep all the appreciation upto 500K tax free.

Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#184

Post by beatpanda »

KKKKkkkk1 wrote: post #18
chadlavi wrote: post #13

As a Brooklyn resident (who rents), I hope this trend picks up steam and continues. Maybe I could be a homeowner some day after all!

As a foreigner, I don't understand this attitude. Why would you want all your wealth to be invested in a single leveraged asset that's also depreciating, requires your constant attention and ties you to a single locale?

Because in America, the balance of rights is heavily tilted in favor of landlords, and if you're a renter, you are constantly in danger of losing your home with little to no legal or social consequences for your landlord.

Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#185

Post by kale »

beachstartup wrote: post #98
marincounty wrote: post #85

Earlier quoted context omitted.

I don't know anything about this company. I have an idea what market they are trying to crack. I can't believe it's taken this long. I've always felt paying a Realtor 3% on the biggest item most of us will buy in our lives is crazy. I just don't know what they do for that commission. I don't know what makes one successful--just because he/she sold more than the others? Pay them more because they know how to network?…

you pay them a commission because real estate deals can get ugly, fast, especially in competitive markets like in the coastal US. a good agent has seen it all before, knows what to do when the seller or buyer starts making threats or is trying to angle the deal somehow. he knows what lawyers to call, what finance people to call, and yes, networks and has relationships with agents to get you properties that haven't hi…

I have a great real estate agent. He knew the math equations that HUD used to price their homes at auction, and what percentage of that price they'd take. Our first house (bought in 2008), he suggested that if we waited to make a bid on a house until a certain day, the price would drop, and they'd take 80% of the asking price. He was correct and we made a lot of money by selling when the market came back.

On the next house, he looked at the roof and knew that the house probably had a recalled shingle on it, and we couldn't even get insurance on the house with that shingle. The homeowner was stuck between replacing the shingles or taking a chance that the next buyer would have less attentive real estate/home inspectors.

Twice I have greatly benefited financially by his expertise. I'm not paying him a lot for his services necessarily (although he's great at it), I'm paying him for his expertise.

Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#186

Post by gigawhat »

throwaway6497 wrote: post #183
lisper wrote: post #161

Earlier quoted context omitted.

It's even worse than that. If your house has appreciated more than $250k (or $500k if you're married) then you have to pay capital gains tax on the rest. And this is a fixed amount regardless of how long you've owned your home, so the longer you stay, and the more your house appreciates, the greater the penalty when you ultimately sell.

I am not a tax expert but I have heard that as long you put the appreciation money back into a house purchase, you can keep all the appreciation upto 500K tax free.

Yup, if married and you've been there a couple of years. $250k if single.

Still, almost anyone who bought a house a few years ago in the area is sitting on at least $500k in gains. So even if taxes on the remainder are arguably fair from a revenue perspective, they are another constraint on housing market liquidity.

Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#187

Post by philrapo »

tormeh wrote: post #159
gigawhat wrote: post #146

Weirdly, I own a house and think I'd be better off if prices fell-- fell a lot. I bought a few years ago and would be happy if prices uniformly dropped to those levels. Why? I want a 50% bigger/nicer house in the same area. But bigger/nicer houses have increased in price proportionally to mine. So the gap in absolute dollars between what I have and what I want has expanded quite a bit. My income has increased, but no…

The more expensive a property is, the less its price falls in bad times. Rich people are rarely forced to sell. It's a different market basically disconnected from the rest. I don't know what kind of house you want, but there's a nonlinearity there that might be important.

Levered people, whether rich or poor, are the ones who are forced to sell. There are always some over levered folks from both ends of the economic spectrum.

As long as you can make your monthly payments, you'll never be forced to sell.

Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#188

Post by morgante »

lsc wrote: post #134
pascal1usa wrote: post #63

Earlier quoted context omitted.

Yup. And, as vc dollars start drying up and companies get pressure to become profitable again, employers will figure out where to go: out of San Francisco.

So, my impression is that the companies that pay enough that you can actually afford to think about buying in SF are the large and profitable companies... from what I've seen, vc-dependent startups pay dramatically less. Of course, most of those profitable company jobs are in the south bay, not in SF proper, but hell, if I could buy one of those mini-condos in sf for a quarter mill, I'd jump on it. I'm trying to say…

They form the same labor market though. Fewer startups puts less pressure on the price for hiring engineers.

You don't have to many any assumptions about advertising dollars (the vast majority of which come from outside SV) to see how a startup slowdown will also have an impact on all engineering salaries.

Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#189

Post by BashiBazouk »

tormeh wrote: post #159
gigawhat wrote: post #146

Weirdly, I own a house and think I'd be better off if prices fell-- fell a lot. I bought a few years ago and would be happy if prices uniformly dropped to those levels. Why? I want a 50% bigger/nicer house in the same area. But bigger/nicer houses have increased in price proportionally to mine. So the gap in absolute dollars between what I have and what I want has expanded quite a bit. My income has increased, but no…

The more expensive a property is, the less its price falls in bad times. Rich people are rarely forced to sell. It's a different market basically disconnected from the rest. I don't know what kind of house you want, but there's a nonlinearity there that might be important.

That is not what I have seen in the bay area over the last few decades. The high end fluctuates quite a bit but the low end is steady and remains high. Much more competition for starter homes than higher end homes around here...

Re: San Francisco Home Prices Fell for the First Time in Four Years in March

#190

Post by anxman »

gigawhat wrote: post #186
throwaway6497 wrote: post #183

Earlier quoted context omitted.

I am not a tax expert but I have heard that as long you put the appreciation money back into a house purchase, you can keep all the appreciation upto 500K tax free.

Yup, if married and you've been there a couple of years. $250k if single. Still, almost anyone who bought a house a few years ago in the area is sitting on at least $500k in gains. So even if taxes on the remainder are arguably fair from a revenue perspective, they are another constraint on housing market liquidity.

There's two scenarios in which one can avoid or delay taxation when his home has appreciated:

1) $250k deduction if single ($500k deduction if married) during the year in which the capital gains has occurred.

2) Convert the property to a business and use a 1031 Like Kind Exchange in which 100% of the profits can be rolled into a new property and deferred until that property is liquidated or the gains are realized.

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