Americans still think they can make money flipping houses • Hacker News Board

Re: Americans still think they can make money flipping houses

#121

Post by briandear » Sat, Jul 09, 2022, 2:01 PM UTC

zacherates wrote: post #69

lotsofpulp wrote: post #33

Earlier quoted context omitted.

I was referring to taxpayers subsidizing the actual loan itself, not the act of owning a home. What are the tax incentives (in the US)? On a federal level, all I can think of is mortgage interest tax deduction, but that was greatly neutered in 2017 TCJA, and less than 10% of Americans can benefit from it. And that is a tax incentive to borrow money to buy a home, not a tax incentive for home owners. Only other one is…

The biggest tax benefit of living in an owner occupied home is that nobody pays income tax on the rent you would pay if you were living in a house someone else owned. ... but most places don't have the stones to tax imputed rent [1]: Belgium, Iceland, Luxembourg, the Netherlands, Slovenia, Spain and Switzerland being exceptions. [1] https://en.m.wikipedia.org/wiki/Imputed_rent

Taxing imputed rent? That’s ridiculous. Taxing income someone might have made? Some people and countries want the government to have far too much power. If someone decides not to work, should we tax the income they could have made?

Re: Americans still think they can make money flipping houses

#122

Post by endisneigh » Sat, Jul 09, 2022, 2:02 PM UTC

m0llusk wrote: post #74

endisneigh wrote: post #30

Earlier quoted context omitted.

What area are you referring to where housing was understood to be a depreciating asset? Though that’s true in the literal sense, there are only a handful of instances in American history where they was empirically the case. Not to mention you don’t specify a locale which is the most important thing in real estate, heck, these days perhaps a neighborhood.

I am referring to the United States. In my youth I traveled a great deal, especially around the Midwest and Boston-Washington DC corridor and nearby countryside, much of which has since been developed. If you do a search for long term housing price data you will see that until the burst of inflation in the mid 1970s house prices were mostly flat. There was still inflation and wear, but the prices remained about where…

What you’re saying isn’t true though.

https://fred.stlouisfed.org/series/MSPUS

Not to mention you can collect or save on rent which also goes up with inflation

Re: Americans still think they can make money flipping houses

#123

Post by briandear » Sat, Jul 09, 2022, 2:03 PM UTC

pooper wrote: post #97

zacherates wrote: post #69

Earlier quoted context omitted.

The biggest tax benefit of living in an owner occupied home is that nobody pays income tax on the rent you would pay if you were living in a house someone else owned. ... but most places don't have the stones to tax imputed rent [1]: Belgium, Iceland, Luxembourg, the Netherlands, Slovenia, Spain and Switzerland being exceptions. [1] https://en.m.wikipedia.org/wiki/Imputed_rent

If the choices are between implementing tax on imputed rent and killing all economists by boiling them all alive, I'll gladly start gathering firewood. I'm just joking. I am all for higher taxes on everyone. I have one condition though. If I should pay tax on imputed rent, then Google and Facebook should pay taxes everytime someone clicks on a sponsored link that takes them to their own property. Every time I bring u…

> I am all for higher taxes on everyone.

Why? Taxes should be the minimum required to provide for the core services of government. Big governments are dangerous. Also taxes have deadweight loss.

Re: Americans still think they can make money flipping houses

#124

Post by astura » Sat, Jul 09, 2022, 2:05 PM UTC

This article is extremely confusing. It's comparing stocks, a purely financial instrument, with a personal home that you live in and calling that "flipping houses." It's just all over the place and very surprising it's coming from such a mainstream publication.

People mainly buy the houses they live in in order to have a place to live, full stop. Investment properties are a completely different concept and most Americans aren't involved in real estate investing whereas most Americans are involved in buying personal homes. It also totally makes sense people who are very unfamiliar with financial instruments (like young people) don't have any idea about what sort of return they have. Everyone's familiar with houses though - TFA says 2/3rds of Americans own their house.

Like, duh, you aren't going to make money just buying a house to live in - If I sold my house at a big profit because the housing market overall increased I'd still have to live somewhere so my "profit" would just go into the increased cost of my new house and I'd be out closing fees and agent fees on both ends.

I think a house you buy to live in is a bad investment and I own much more stocks than I have equity in my house. I've put thousands into my house in the last several months especially and it only seems to be getting more and more expensive every year I own it. I'm thinking I might have to reduce my monthly savings for the first time ever.

However, I have to live somewhere and I like the security of owning my house and I like that I can customize it and nobody tells me I can't have cats. I have the money to pay extra for that. It's not an investment though, at least not a financial one.

Re: Americans still think they can make money flipping houses

#125

Post by giaour » Sat, Jul 09, 2022, 2:06 PM UTC

synu wrote: post #117

giaour wrote: post #112

Earlier quoted context omitted.

> 1650 I don't think your house is representative of the US housing market. I once lived in an apartment in a 17th century masonry building in Alsace, and it didn't seem to give my landlord nearly as much grief as my parents' 1960s-era suburban home in Houston did to them.

Sure, just mentioning that it is possible to build a house that lasts a long time. There isn’t some law of nature that prevents it.

True, but houses like that are far more expensive to build today. I'm not sure you could "flip" a new home built with traditional masonry since it would require a larger upfront investment. (Edit to add: the normal American usage of "flip" (buying a degraded property, fixing it up, and reselling) is also not really applicable to houses in move-in-ready condition.)

The original construction costs will probably have been recouped after 370 years of continuous occupancy, though. :)

Re: Americans still think they can make money flipping houses

#126

Post by frankbreetz » Sat, Jul 09, 2022, 2:06 PM UTC

Flipping houses is not that different then building houses. If you buy a house that is not inhabitable make, make it habitable and sell it for a profit, that is value added to the economy and is a good career path.

There are some people that take advantage of uninformed sellers buy a house cheap and put some paint on it and mark it up significantly, but there are bad people in every industry.

This paragraph makes it sound like a hit piece: >>Between 2006, the peak of the previous housing bubble, and 2019, average home prices have increased just 13%, according to the S&P/Case-Shiller Home Price Index. In that same time period, the S&P 500 rose 125%. In other words, stocks did 10 times better than real estate.

-Seletivly picks a period of the biggest housing crash in history and there is still increase.

-that would be the amount it increased with no value add.

-if you buy, hold, and rent you will make significantly more. If you are talking a 13 year period you are probably doing this. You buy with mortgage, have tenants pay mortgage, mortgage gets paid off plus profit. This stat leaves of monthly profit plus the fact you only had to 20% down, so you cash on cash return of just appreciation is closer to 75%. Also about 30% of your mortgage would get paid of if you had a 30 year mortgage, and almost all of a 15 year mortgage.

Real estate can grow with cpi and still be a good investment. You just can't be leech and have to add value to the economy. I.e Let some live there and build improvements. It is more hands on,but definitely better returns then the stock market.

Re: Americans still think they can make money flipping houses

#127

Post by nemo44x » Sat, Jul 09, 2022, 2:08 PM UTC

llampx wrote: post #104

nemo44x wrote: post #72

Earlier quoted context omitted.

Look at total numbers.

Care to elaborate why absolute values are better than rates here?

Because western countries import a lot of people that rely on urban rentals. Also younger people tend to favor starting a family later in life as they develop their careers (and are more interested in urban life) meaning apartment life is preferred.

Re: Americans still think they can make money flipping houses

#128

Post by nemo44x » Sat, Jul 09, 2022, 2:09 PM UTC

HWR_14 wrote: post #85

nemo44x wrote: post #55

Earlier quoted context omitted.

Falling interest rates for 40 years wasn’t the problem. If anything there has been less demand for money which is why rates fall. Things are far less capital intensive than they used to be in many cases. Falling interest rates have been great for people as more people own homes than at any other point in history. But printing trillions more last year was a flaw. At least got physical proof that MMT doesn’t work.

>more people own homes than at any other point in history. Not in the US, and this article is about Americans.

As a total amount, yes. Percentages aren’t relevant especially as you consider the high rates of immigration and that many younger people make the lifestyle choice to rent in urban centers until they’re older and want a home in the suburbs.

Re: Americans still think they can make money flipping houses

#129

Post by briandear » Sat, Jul 09, 2022, 2:10 PM UTC

nxm wrote: post #22

Easy way to save money when selling a home is to just sell it yourself. Real estate agents are, imho, one of the most useless professions. All you need is a real estate attorney, which you’d need one anyway.

A good agent gets you more buyers. More buyers mean you can sell for a higher price. And coordinating showings and offers is a lot of work. Agents also expose the house to a wider buyer pool via the MLS. And most standard house deals can use standard contracts, so an attorney isn’t generally necessary. I recommend attorneys for all commercial leases because those are generally complicated. But for buying a simple residential property using standard contracts — pretty routine.

Re: Americans still think they can make money flipping houses

#130

Post by nemo44x » Sat, Jul 09, 2022, 2:13 PM UTC

epistasis wrote: post #61

nemo44x wrote: post #55

Earlier quoted context omitted.

Falling interest rates for 40 years wasn’t the problem. If anything there has been less demand for money which is why rates fall. Things are far less capital intensive than they used to be in many cases. Falling interest rates have been great for people as more people own homes than at any other point in history. But printing trillions more last year was a flaw. At least got physical proof that MMT doesn’t work.

MMT is the idea that inflation is the result of government spending, rather than "bankruptcy" or people being unwilling to buy US government bonds. And in particular that limited productive capacity will cause inflation. So if anything the past years show that MMT was exactly right all along.

Nah just look at Sri Lanka. Another exhibit of MMT and how it destroys economies.