no_vaseline_IHB
New member
ipoplaya said:
This is what I'm trying to say. Most people who can afford a median priced Irvine home have incomes that already subject them to AMT, thus negating the tax benefit.
When is the best time to buy??????????
- Thread starter firsttimehomebuyer_IHB
- Start date
NEW -> Contingent Buyer Assistance Program
This is what I'm trying to say. Most people who can afford a median priced Irvine home have incomes that already subject them to AMT, thus negating the tax benefit.
Indeed. It doesn't take much for a double-income family to hit the non-adjusted/old/current for 2008 AMT number... The fixes the past couple of years has really helped out. Need that again this year!
high net-worth individuals who invest assuming "increasing housing costs" in the OC will become low net-worth individuals
mmmhhhh. do youhave a mortgage, WestparkRenter ?
The worst part of Santa Ana is on Edinger between Bristol and Grand. The High School near Grand and Edinger is the corner where most gang fights between rivals occured. It is 2 miles from VOC.
No
Again, 1992 to 1998 proves you wrong.
Where is that picture that shows the cost to rent was more than to own from the 90s when you need it?
I know the concept of irrational exuberance is difficult to convey, but it is important because periodically prices fall to fundamental valuations and stay their for extended periods of time before people "buy in" to the nonsense of perpetual appreciation and foolishly bid up prices again. At some level I sense that you get this, or you wouldn't have noted that "Value in housing is based on perception of value and the recent transactions that represent that." That is the essence of irrational exuberance. The real value of housing is based on comparative rents. That is a measurable valuation technique. The amount that someone pays for housing based on foolish ideas is not "value," it is current pricing. When prices crash, they fall until they reach the true value. If you think it is a good time to buy based on perceived value, what happens when perceptions change? You see, underlying rental value doesn't change with the psychology of the market. Perceived value does.
NOOOOOOOO! That means you will be even further away. Sad crackercakes. :down:
I second that. :long:
I'll wave to you on my way back from Ventura County.
$1500 a month for a 1/1 is a mint for a rental, especially in that part of the world. Absolutely the top of the market.
Trooper....do you happen to work the division which patrols the Porter Ranch area? I think Devonshire? All of our extended family on my wife's side lives out in Northridge, and with an addition to our own family on the horizon, we are strongly considering a move closer to retired g'parents, siblings, and their families. We have been looking hard at Porter Ranch -- and I would love to know if you have an opinion on the relative safety of that area, from an insider perspective. Many thanks for any thoughts you have.
Maybe we'll be neighbors!
Almost my entire family lives up in the area, Porter Ranch, Granada Hills, Valencia, etc. Not a bad area but somewhat tough commute if you gotta head into DT LA.
Hey Troop, my family owns a couple of condo rentals in Valencia. Older places but walking distance to Valencia Town Center. Nice neighborhood. If you'd be interested in a place like this, I can check and see if either if either lease is coming up...
The entire Porter Ranch has been developed by Shapell with products that offer larger lots. Wind and fire are residents concern. Crime is low there due to its neighboring community of Simi Valley (cop capitol).
There are many other assets that sell at their "perceived value" like stocks. The assumption is that in a market with perfect information the perception will represent an accurate future value of the asset. New events occur that change perception are said to be "priced into the market" once an adjustment has occured. One analyst's opinion (like the one quoted by JP Morgan recently) is not enough to validate a trend since they are other analysts with opinions that differ. To accept your theory rent rates equals "real values" would be like saying that book value is the "real value" for stocks.
Would buying a house at the rent rate generally be a good buy? Yes, assuming that the property is a quality building in good repair in a good location that is neither excessively larger or excessively smaller than the neighborhood. Yet, wouldn't the value be higher to an investor who could receive not just the rental rate but also real tax savings from depreciating the cost of the building? Or would that same property be worth more if the rent rate could be increased by marketing the property to college students who collectively could pay more than a middle-income family and are willing to do so because it is in close proximity to their school?
Occasionally stocks trade at their book value. Generally the ones that do are bad companies that either don't have positive prospects or haven't been able to communicate that to the investment community. It's not irrational exuberance to acknowledge that a standardized method for valuing SFR homes is to look at recent "comps" and adjust them to match the property that you're reviewing. I've said before that in addition to the adjustments for similar attributes but you should also adjust for financing costs.
What you call the "real value" I consider the "minimum value". A "rational value" can and should be higher than the rental rate. At the recent peak rental rates were about 50% of the "comparable market price". With prices down approximately 25% because of the short-sales, foreclosures, and strong competition from new home sales that would put rental rates at 67% of the "value". When you consider that the "holding cost" doesn't increase as quickly as rents the longer you own the property it will gain a competitive advantage compared to the same neighborhood over time.
If we were both real estate analysts at Wall Street firms, then you would most likely post a SELL recommendation and I would post a HOLD recommendation (yesterday I would have had a BUY rating but congress is adding a lot of uncertainty to the market right now by saying they're doing something then failing to get the votes).
If you were my adviser knowing that I subscribe to the higher than rental rate viewpoint... what range would you approve in protest? What would you say the current ratio is?
Mortgage Interest Deduction Rules
Q: Tax Playa, can I deduct the mortgage interest on my home?
Kurt, Salt Lake City, UT
A: In general, mortgage interest is deductible. In practice, however, it is only open to those 30% of taxpayers who itemize their deductions. Additionally, the deduction tops out after a second home, a large set of mortgages, or a high income.
For more information on the home mortgage interest deduction, please consult IRS Publication 936, "Home Mortgage Interest Deduction."
If you or your spouse is legally liable for a mortgage that is a secured debt on a qualified home, the interest on that mortgage is deductible.
There are several limitations on this:
You must itemize your deductions. For the most part, if you had a mortgage for most of the year, this isn't a difficult threshold to meet.
The mortgages can only cover your main home and a second home.
Only $1,000,000 total of "home acquisition" mortgage debt is allowed (debt used to pay for your home).
Only $100,000 total of "home equity" mortgage debt is allowed (cashing out equity). This is completely-disallowed for AMT taxpayers.
When the $1,000,0000/$100,000 limits were put in place in 1987, that was a stratospheric amount of debt to carry. Now, though, it isn't hard to see a married couple having two $600,000 mortgages on two homes. They are still more affluent than the average American, but Joe Sixpack is catching up.
If there is any business or rental use of your home, the interest must be properly-allocated between personal and business/rental use.
Points paid at closing are fully-deductible if they are to acquire the home. For refinancings and cash-outs of equity, though, the points deduction must be amortized over the life of the loan.
Like most itemized deductions, the home mortgage interest deduction is subject to the itemized deduction phaseout. If your AGI exceeds $150,500 in 2006, your home mortgage interest deduction will begin to be slowly disallowed.
This is what I'm trying to say. Most people who can afford a median priced Irvine home have incomes that already subject them to AMT, thus negating the tax benefit.
ipoplaya_IHB
New member
no_vaseline said:
Indeed. It doesn't take much for a double-income family to hit the non-adjusted/old/current for 2008 AMT number... The fixes the past couple of years has really helped out. Need that again this year!
upperlowerclass_IHB
New member
columbussquare.com said:
high net-worth individuals who invest assuming "increasing housing costs" in the OC will become low net-worth individuals
flmgrip_IHB
New member
WestparkRenter said:
mmmhhhh. do youhave a mortgage, WestparkRenter ?
LoudRoar_IHB
New member
I think tomorrow is the best time to buy.
Don't wait till October. Make sure you get only a fixed loan and put 20% or don't buy it.
Don't wait till October. Make sure you get only a fixed loan and put 20% or don't buy it.
GraceOMalley_IHB
New member
hs_teacher said:
The worst part of Santa Ana is on Edinger between Bristol and Grand. The High School near Grand and Edinger is the corner where most gang fights between rivals occured. It is 2 miles from VOC.
WestparkRenter_IHB
New member
flmgrip said:
No
No_Such_Reality_IHB
New member
columbussquare.com said:
Again, 1992 to 1998 proves you wrong.
graphrix_IHB
New member
No_Such_Reality said:
Where is that picture that shows the cost to rent was more than to own from the 90s when you need it?
IrvineRenter_IHB
New member
columbussquare.com said:
I know the concept of irrational exuberance is difficult to convey, but it is important because periodically prices fall to fundamental valuations and stay their for extended periods of time before people "buy in" to the nonsense of perpetual appreciation and foolishly bid up prices again. At some level I sense that you get this, or you wouldn't have noted that "Value in housing is based on perception of value and the recent transactions that represent that." That is the essence of irrational exuberance. The real value of housing is based on comparative rents. That is a measurable valuation technique. The amount that someone pays for housing based on foolish ideas is not "value," it is current pricing. When prices crash, they fall until they reach the true value. If you think it is a good time to buy based on perceived value, what happens when perceptions change? You see, underlying rental value doesn't change with the psychology of the market. Perceived value does.
Trooper_IHB
New member
I have a good example.
I'll be moving in 3 months due to a change in worksite (I just got transferred to the Valley !) Sooo, I drove out to Santa Clarita/Valencia area to start looking at places. I found a nice 1/1 in a newer lennar building www.lennarmadison.com These were originally condos for sale, but after only 76 sold, they turned to rentals. So, poor 76 buyers.....they have renters all around them, but they're stuck.
There are a couple of comparable units still for sale.....like the one I'm interested in renting.
Now, If I rent a 1/1 there, I pay 1500 flat. If I buy, with PITI and condo fee, I'd shell out about 600 more a month. So, it's a no brainer to rent right now.
Lennar condo in Valencia
I'll be moving in 3 months due to a change in worksite (I just got transferred to the Valley !) Sooo, I drove out to Santa Clarita/Valencia area to start looking at places. I found a nice 1/1 in a newer lennar building www.lennarmadison.com These were originally condos for sale, but after only 76 sold, they turned to rentals. So, poor 76 buyers.....they have renters all around them, but they're stuck.
There are a couple of comparable units still for sale.....like the one I'm interested in renting.
Now, If I rent a 1/1 there, I pay 1500 flat. If I buy, with PITI and condo fee, I'd shell out about 600 more a month. So, it's a no brainer to rent right now.
Lennar condo in Valencia
graphrix_IHB
New member
Trooper said:
NOOOOOOOO! That means you will be even further away. Sad crackercakes. :down:
caycifish_IHB
New member
graphrix said:
I second that. :long:
I'll wave to you on my way back from Ventura County.
no_vaseline_IHB
New member
Trooper said:
$1500 a month for a 1/1 is a mint for a rental, especially in that part of the world. Absolutely the top of the market.
kcmkane_IHB
New member
Trooper said:
Trooper....do you happen to work the division which patrols the Porter Ranch area? I think Devonshire? All of our extended family on my wife's side lives out in Northridge, and with an addition to our own family on the horizon, we are strongly considering a move closer to retired g'parents, siblings, and their families. We have been looking hard at Porter Ranch -- and I would love to know if you have an opinion on the relative safety of that area, from an insider perspective. Many thanks for any thoughts you have.
Maybe we'll be neighbors!
ipoplaya_IHB
New member
CK said:
Almost my entire family lives up in the area, Porter Ranch, Granada Hills, Valencia, etc. Not a bad area but somewhat tough commute if you gotta head into DT LA.
Hey Troop, my family owns a couple of condo rentals in Valencia. Older places but walking distance to Valencia Town Center. Nice neighborhood. If you'd be interested in a place like this, I can check and see if either if either lease is coming up...
bkshopr_IHB
New member
CK said:
The entire Porter Ranch has been developed by Shapell with products that offer larger lots. Wind and fire are residents concern. Crime is low there due to its neighboring community of Simi Valley (cop capitol).
columbussquare.com_IHB
New member
IrvineRenter said:
There are many other assets that sell at their "perceived value" like stocks. The assumption is that in a market with perfect information the perception will represent an accurate future value of the asset. New events occur that change perception are said to be "priced into the market" once an adjustment has occured. One analyst's opinion (like the one quoted by JP Morgan recently) is not enough to validate a trend since they are other analysts with opinions that differ. To accept your theory rent rates equals "real values" would be like saying that book value is the "real value" for stocks.
Would buying a house at the rent rate generally be a good buy? Yes, assuming that the property is a quality building in good repair in a good location that is neither excessively larger or excessively smaller than the neighborhood. Yet, wouldn't the value be higher to an investor who could receive not just the rental rate but also real tax savings from depreciating the cost of the building? Or would that same property be worth more if the rent rate could be increased by marketing the property to college students who collectively could pay more than a middle-income family and are willing to do so because it is in close proximity to their school?
Occasionally stocks trade at their book value. Generally the ones that do are bad companies that either don't have positive prospects or haven't been able to communicate that to the investment community. It's not irrational exuberance to acknowledge that a standardized method for valuing SFR homes is to look at recent "comps" and adjust them to match the property that you're reviewing. I've said before that in addition to the adjustments for similar attributes but you should also adjust for financing costs.
What you call the "real value" I consider the "minimum value". A "rational value" can and should be higher than the rental rate. At the recent peak rental rates were about 50% of the "comparable market price". With prices down approximately 25% because of the short-sales, foreclosures, and strong competition from new home sales that would put rental rates at 67% of the "value". When you consider that the "holding cost" doesn't increase as quickly as rents the longer you own the property it will gain a competitive advantage compared to the same neighborhood over time.
If we were both real estate analysts at Wall Street firms, then you would most likely post a SELL recommendation and I would post a HOLD recommendation (yesterday I would have had a BUY rating but congress is adding a lot of uncertainty to the market right now by saying they're doing something then failing to get the votes).
If you were my adviser knowing that I subscribe to the higher than rental rate viewpoint... what range would you approve in protest? What would you say the current ratio is?
no_vaseline_IHB
New member
flmgrip_IHB
New member
no_vaseline said:
Mortgage Interest Deduction Rules
Q: Tax Playa, can I deduct the mortgage interest on my home?
Kurt, Salt Lake City, UT
A: In general, mortgage interest is deductible. In practice, however, it is only open to those 30% of taxpayers who itemize their deductions. Additionally, the deduction tops out after a second home, a large set of mortgages, or a high income.
For more information on the home mortgage interest deduction, please consult IRS Publication 936, "Home Mortgage Interest Deduction."
If you or your spouse is legally liable for a mortgage that is a secured debt on a qualified home, the interest on that mortgage is deductible.
There are several limitations on this:
You must itemize your deductions. For the most part, if you had a mortgage for most of the year, this isn't a difficult threshold to meet.
The mortgages can only cover your main home and a second home.
Only $1,000,000 total of "home acquisition" mortgage debt is allowed (debt used to pay for your home).
Only $100,000 total of "home equity" mortgage debt is allowed (cashing out equity). This is completely-disallowed for AMT taxpayers.
When the $1,000,0000/$100,000 limits were put in place in 1987, that was a stratospheric amount of debt to carry. Now, though, it isn't hard to see a married couple having two $600,000 mortgages on two homes. They are still more affluent than the average American, but Joe Sixpack is catching up.
If there is any business or rental use of your home, the interest must be properly-allocated between personal and business/rental use.
Points paid at closing are fully-deductible if they are to acquire the home. For refinancings and cash-outs of equity, though, the points deduction must be amortized over the life of the loan.
Like most itemized deductions, the home mortgage interest deduction is subject to the itemized deduction phaseout. If your AGI exceeds $150,500 in 2006, your home mortgage interest deduction will begin to be slowly disallowed.