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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

#201

Post by troisx »

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 believe there's a two year minimum to get that capital gains exception, so you'd have to flip every two years.

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

#202

Post by [deleted] »

kspaans wrote: post #167
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.

"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.)

[deleted]

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

#203

Post by thescriptkiddie »

Cypher wrote: post #124
ChuckMcM wrote: post #115

Reaffirming once again that if "nobody can afford to buy them" the actual prices start coming down. A more interesting thing for me however was that owner occupied (which is to say the person buying the house lives there) has not been growing[1]. Instead third parties are buying the houses as investments and renting them. That is a really risky strategy in a place like SF with rent controls as the floor can fall out…

Even if houses are flat its still better to put your cash into one than the bank...

Contrary to popular belief, real estate is literally never a good investment. At best, prices go up faster than property tax and you profit modestly from the misfortune of others for a couple of years before the bubble bursts. At worst, your investment is rapidly eaten away by depreciation and maintenance costs.

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

#204

Post by BashiBazouk »

raldi wrote: post #128

Is this just a reversion to the mean following a one-time jump due to IPOs from, e.g., Facebook and Twitter? I guess what I'm asking is, did SF housing prices merely fall back to where they were in 2013? Or all the way back to where they were in, say, 2009?

Not even close. More like they dropped to a few months ago. 1.8% seems like a rounding error. Probably the middle to high end is seeing most of the drop. In the 2-5 million range, houses have been staying on the market longer. Houses around where I live are still selling for $100,000 + over what I paid in 2013...

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

#205

Post by ethbro »

SapphireSun wrote: post #194
dice wrote: post #191

Earlier quoted context omitted.

There's a two year minimum that you must hold the home to qualify for the exclusion. So it's not "every time" it appreciates, but it is "once every two years". https://www.irs.gov/publications/p523/ar02.html#en_US_2015_p...

Seems simple to apply the tax rate pro-rata rather than on a cliff. Then the rule works more fairly and gaming is somewhat limited. Government seems to love rule cliffs for some reason.

Artifact of a pre-digital tax/legal system?

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

#206

Post by deelowe »

beatpanda wrote: post #196
pjlegato wrote: post #195

Earlier quoted context omitted.

Advocates for the reverse ought to bear in mind that however noble the goal of avoiding harm to individuals in the short term may be, the harm done to individuals in the long term is even more massive, and then much harder to fix. Two case in point examples: Prop 13, and rent control. These are not, as popularly concieved, great ways to protect the poor and disadvantaged. They are simply examples of very short term t…

Right, and I agree with you, but the fact that it would be better not to have them in the long run doesn't do anything about the short term harm of thousands of people losing their homes all at once. "It will be better for everyone in the aggregate, eventually" doesn't do anything for someone who just became homeless. What I'm saying is, if you want this policy, start thinking of ways you could change it while accoun…

Sometimes the only way to fix systemic issues is via strategic planning.

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

#207

Post by outworlder »

scurvy wrote: post #97
yardie wrote: post #5

Earlier quoted context omitted.

That's not exactly true. A lot of REIs are built on complex structures. The SF estate market might be fueling other investments. Once one starts to collapse it can have a domino effect. Basically if investors were expecting 10% annual return and you tell them this year might be 1-2% they'll take that money and move it elsewhere. Now you have to raise money or sell. When I used to live in downtown Miami there were hig…

And Miami is hot again from foreign (Russian and South American) buyers. Blocks of housing in Edgewater are razed to put up huge luxury condos. My wife (Brazilian) and I joke that we won't have to take the kids all the way to Brazil. We just need to go to Miami.

Given the way the economy has crashed, this won't go on for long.

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

#208

Post by bufordsharkley »

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.

Could one make the case that the liquidity this adds to the housing market justifies the tax savings?

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

#209

Post by bufordsharkley »

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.

And to make explicit an obvious fact, because of Prop 13, revaluations on homes are only made when it's resold. A person whose family has owned a house for decades has very little incentive to ever move on.

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

#210

Post by tmaly »

joncooper wrote: post #153
tmaly wrote: post #90

Earlier quoted context omitted.

There is always going to be high demand for houses that are close to the large job centers. How strong that demand is will be partly influenced by the economy. The housing boom we saw in the mid 2000s was a bit of a fluke due to asset inflation that arose from the Feds ZIRP. One could argue that the current asset appreciation we are seeing from 2011 to present is another unintended consequence of the ZIRP.

I'd take it a step further and argue that asset appreciation was an intended outcome of ZIRP.

Think about it, if peoples houses and 401Ks went belly up, there would be chaos and major fallout.
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